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To: mishedlo who wrote (51540)	1/26/2006 2:13:57 PM
From: shades	Respond to of 110194

DJ EU Fin Advisers Reject Hedge Fund Indexes For EU Funds . BRUSSELS (Dow Jones)--Financial advisers to the European Commission Thursday recommended that it reject requests that pan-European investment funds should be allowed to invest in hedge fund indexes because they are too risky. The Committee of European Securities Regulators, a group of experts from across the European Union that advises Commission officials on financial matters, came to its conclusion after studying what new assets can be included in cross-border funds called UCITS. The Commission is widely expected to take the committee's advice. Europe's financial sector had proposed including the indexes. These financial instruments are an average of returns from a group of hedge funds. The Commission has been trying to encourage E.U. citizens to opt more for cross-border investment through UCITS, partly to help plump up their private accounts and stave off worries over a looming crisis in pension payments. Excluding hedge fund indexes is designed to guarantee the safety of UCITS being used by regular private investors with limited financial expertise. "Given the complexities of hedge fund indexes and the fact that they are still developing, CESR can't recommend, at this stage, allowing hedge fund indexes to be considered as financial indexes for the eligibility of UCITS," the committee said in a statement. The committee added it would be willing to reconsider its position by October 2006 after observing the financial instrument carefully. "I...hope that investors will now be able to benefit from the increased choice of products which will become available as a result, whilst knowing that adequate safeguards are also in place," said Lamberto Cardia, chairman of the committee's Expert Group on Investment Management. The committee also said money-market instruments, such as certificates of deposit, should be allowed into UCITS, along with indexes based on financial derivatives on property.