In this chapter, you will learn about the regulatory regime that governs the hedge fund industry, the two main legal structures utilized by hedge funds in Canada, and derivative products used in hedge fund investing. Our final discussion will deal with how investors can access hedge funds through linked notes, offshore funds, funds of funds, commodity pools, and managed accounts.

When you have completed this chapter, you should be able to:

• Explain the provincial regulatory regime that governs hedge funds, including disclosure requirements and the accredited investor exemption

• Identify and describe the two main legal forms used for hedge funds today, why and when each one is used and the risks and benefits associated with each

• Explain the basics of derivatives and how they are used in hedge funds

• Understand how hedge fund investments can be structured through linked notes, offshore funds, funds of funds, commodity pools and managed accounts