Clouds gather over sunshine funds, but hope remains

There is some optimism that regulatory relaxations tipped for next year will bolster China’s bleeding sunshine funds market – the private trusts that serve as prototypes of hedge funds. Countrywide there are now about 1,800 such funds, which enjoy greater flexibility in investment strategy than, say, mutual funds, in that they are not required to have at least 60% of their portfolio invested in their equity strategy and can increase cash positions to evade risk. The universe is …