Experienced, Specialist and Qualified Investor Funds

Experienced Investor Fund (EIF), Specialist Investor Fund (SIF), Qualified Investor Fund (QIF) are three investment fund categories. There are different definitions for each category depending on the jurisdiction in which the fund has been established. The common denominators are: they are not suitable for retail investors; they have high initial minimum investment amounts (typically more than US$100,000); require a high level of investment expertise or wealth as a pre-requisite for investing.

There are many reasons why an investment company would wish to set up their fund under one of these regimes; for example, they may  specifically target institutional or experienced investors; the investment strategy or asset may not be suited to retail investors. In return, regulation and establishment processes are generally less onerous.

As with any investment, an investor should only invest in something they understand. The best way to determine whether a fund is suitable for you is to read the legal documentation issued by the fund management group. This may be known as the fund prospectus, private placement memorandum (PPM) or fund particulars.

These are not marketing documents. They will not focus on performance. They are intended to set out the charges, investment strategy and potential risks of investing. They also contain additional information which may help you make an informed investment decision such as whether the fund falls into one of these three investment fund categories.

If you are worried about the time spent reading and understanding the prospectus, consider the amount of time it would take you to earn the money you are investing. This should help put the few hours you spend understanding your investments into perspective.

If the fund does fall into the EIF, SIF or QIF categories you should then satisfy yourself that you meet the eligibility criteria. If you do, you should then consider the investment proposal.

If you do not, then you should not proceed and should instead continue your search for a suitable investment no matter how attractive the investment looks. Selecting an investment is a process of matching your needs to suitable investment opportunities which reaches much further than just investment performance.