March 28, 2016
As a Registered Investment Advisor that uses mutual funds containing alternatives I am writing to voice my objection to S7-24-15 as it is presently written. I have used hedge funds in my own family limited partnership for over twenty five years and as alternative investment mutual funds have become available over the last ten years I have included them in client portfolios. While I welcome the SEC's oversight I think the rules being proposed will hinder my ability to supply my clients with greater diversification and lower volatility that have proven to be beneficial during volatile markets. The vast majority of the $165 million we manage is individual money and having the capability of using mutual funds that have low correlations with the stock market and in lower volatility as well has been beneficial. Removing or restricting the derivatives these mutual funds use does not make sense. If the PIMCO Total Return Bond Fund had not had derivatives when faced with large withdrawals after Bill Gross left they would have caused panic and chaos in the bond markets as they unwound their positions.
I think this subject need the a through examination by experts before blanket rules are set that don't take into consideration the interests of the individual investors the SEC is trying to protect.