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Australian hedge funds are unlikely to follow the example of a number of their United States and European counterparts and convert into family offices in an effort to reduce the regulatory burden.

Alternative Investment Management Association (AIMA) chairman Paul Chadwick said he did not expect Australian funds to restructure as a result of the increased compliance burden worldwide.

I dont think it is a secular trend, Chadwick told theinstoreport.

It centres around the question of whether you are prepared to pay the money to bulletproof your business.

It is interesting that somebody wouldnt do it, [because] you have to make sure you are incredibly mindful that you are managing peoples money.

A number of hedge fund managers in the US and Europe have returned external money to investors and restructured as single family offices, as these family offices are exempt from the Dodd-Frank regulation in the US and the Alternative Investment Fund Managers Directive in Europe.

According to a recent Financial Times article, funds that had chosen that route include New York-based hedge fund Covepoint Capital, set up by former Bear Stearns employee Melissa Ko, which restructured in June, and US fund Brencourt Advisors, which transformed into a family office earlier this year.

High-profile hedge fund manager George Soros turned his Quantum hedge fund into a family office in 2011.

In Australia, ASIC has also stepped up the regulatory burden for hedge funds, establishing a number of new benchmarks and disclosure principles against which hedge funds have to measure themselves.

The benchmarks, which are laid out in in Regulatory Guide 240, include the requirement to provide independent valuations of unlisted assets and periodic reporting.

The disclosure principles relate to providing information about the investment strategy, investment managers who have been appointed by a responsible entity and the use of leverage.

The new regulatory guide would not come into force until February 2014 to allow for extensive consultation, ASIC said.

AIMA has been actively involved with the consultation process and Chadwick said regulators were increasingly inclusive of the association in their activities.

This is also partly driven by hedge funds, which are more willing to work together since the global financial crisis (GFC).

It helped that a lot of post-GFC regulation affected everybody, Chadwick said.

Although the definition of a hedge fund includes a wide variety of fund types and strategies, regulators usually do not distinguish between them.

One of our roles is to interact with the regulators on behalf of the sector because they do not make a distinction between a long/short fund or a pure credit manager, Chadwick said.

The increased interaction with regulators is also evident in this years line-up of speakers at the AIMA Australian Hedge Fund Forum, to be held in Sydney on 10 September.

Both ASIC and the Australian Prudential Regulation Authority will send representatives to speak at the conference.

Other speakers include AIMAs London-based chief executive, Andrew Baker, QIC global fixed income managing director Susan Buckley and Future Fund head of debt and alternatives David George.

The event is free for AIMA-approved institutional investors.