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Fund managers not prepared for AIFMD

Moreover, some 41% percent of them admit having only limited knowledge about the requirements and implications of the AIFMD (see box), research commissioned by fund platform Alceda reveals. “The AIFMD is a very funny thing. Even national regulators often don’t know how to handle it,” Alceda-ceo Michael Sanders illustrates the uneasy feelings the directive incites across Europe’s investment community.

Main AIFMD requirements
  • Domicile in a EU member state
  • Transparent remuneration policies in line with European regulation
  • Increased transparency about the manager, investment strategies, holdings and shareholders
  • Increased capital requirements
  • Quarterly reporting to regulatory authorities

Only four in ten alternative fund management companies have ensured compliance of their funds with the AIFMD. Another 36% of fund managers said they will submit an application before the deadline of 22 July, or will market their funds through the UCITS-format. Another 21% of respondents, mostly non-EU managers, don’t know whether they are ready or said they will stop offering their funds in the EU.

 

Every disadvantage has its advantage

Managers of alternative investment funds see a range of threats to their business looming as the AIFMD kicks in, which either relate to extra costs involved or to additional regulatory requirements.

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The increasing regulatory burden has a good side for them as well though: as all EU-countries will have to adhere to the same rules, it makes cross-border business easier due to the introduction of a European alternative fund passport. Besides that, fund managers expect investor confidence in alternative funds to increase as they expect AIFMD-compliance will function as a sort of quality.

Another 18% of respondents cite reduced competition in the market as a positive, as some non-EU domiciled asset managers are expected to pull out of the European market following AIFMD implementation.

Confusion all around

Another survey on AIFMD readiness conducted by Confluence, a service provider to the asset management industry, was published just a day later. It showed a similar picture of disentanglement, finding that a majority of asset managers do not yet know how they are going to deal with the increased reporting requirements of the AIFMD. Still, they confess seeing the increased regulatory burden associated with the directive as their main concern.