How are private funds managed, and are there investment restrictions?

Most public fund rules, such as diversification requirements, do not apply to private funds, so they enjoy relatively broad freedom in management.

However, the combined total of derivatives risk exposure, debt guarantees, borrowing and the like may not exceed 400% of net assets, and lending directly to individuals, or arrangements with money lenders and others designed to get around this ban, are prohibited. There are also rules such as a requirement to dispose of another company's shares within 15 years once the fund holds 10% or more of them for management participation purposes.