ASIC yesterday released a report which said it reviewed 64 unnamed product disclosure statements (PDS) and found that disclosure within many of them was "deficient".
"We considered that the disclosure was deficient in many of the PDSs we reviewed," the ASIC report said.
"In some cases, the disclosure was structured in such a way that key risks were concealed."
The report said PDSs of capital-protected products and other structured or derivative products needed to clearly explain counterparty risk and provide better disclosure of break costs.
ASIC said it was particularly concerned about the notably inadequate disclosure in the case of a number of funds investing in underlying funds located, or potentially located, in tax haven jurisdictions.
"Our review concluded that many PDSs were seriously deficient in disclosing the investment strategy of the head fund and the underlying funds," ASIC's report said.
"Coupled with the inherent risks in investing in 'tax haven' jurisdictions, potential investors would be making a 'leap of faith' in investing in such funds."
ASIC's review included PDSs of products related to foreign exchange, futures, commodities, warrants, deferred purchase agreements and non-traditional managed funds with structured product-type exposure.
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