Fund Manager Concerns About AIFMD Grow As Deadline Nears

Jul 17 2014 | 9:12am ET

As an important deadline looms, hedge fund managers are more concerned than ever that Europe's Alternative Investment Fund Managers Directive will have a negative impact on their industry.

With the July 22nd deadline for authorization under AIFMD fast approaching, data provider Preqin polled 150 hedge fund managers and found 59% think the directive will have a negative effect on the industry, compared to 53% in December 2013 and 29% in December 2012.
 
A further 22% think it will have no impact and only 20% think it will have a positive impact.

U.S.-based hedge fund managers are the most down on the AIFMD with a full 71% stating it will have a negative impact. Europe-based managers (excluding those in the UK) seem downright cheerful in comparison: only 45% think the directive will have a negative impact and 40% think the impact will be positive.

The majority (58%) of Europe-based (non-UK) managers are already compliant with AIFMD or will be by July 22nd. This is also true of 64% of UK-based managers, although 14% of these have submitted their applications to the FCA but don't expect to be approved by the deadline.

Compliance costs were the primary concern of 43% of the managers polled, none of whom reported lower-than-expected costs of regulation. In fact, costs exceeded expectations for 75% of the fund managers in Europe, Asia and Rest of World.

A full 40% of U.S.-based managers say they will simply not actively market in the EU, relying instead on reverse-solicitation.

Nearly half of hedge fund managers with more than $1 billion in assets under management are already compliant with the AIFMD; these fund managers are likely to have a global client base, including those in the EU, and therefore have both the need and the resources to comply.

“As the 22 July 2014 authorization deadline for the AIFMD approaches, Preqin’s survey reveals that the proportion of managers that feel the AIFMD will have a negative impact on the hedge fund industry is at an all-time high. Fund managers have been endeavoring to meet or navigate the regulatory burdens imposed by the AIFMD over the past 12 months, but many are still concerned about both the cost of compliance and the risks arising as a result of the lack of clarity or guidance,” said Preqin's Amy Bensted in a statement.

“Although many European fund managers have already made sure their funds are or will be compliant, many U.S.-based firms have not, and a significant proportion have decided to not actively market in the EU. They may instead rely on private placement regimes or reverse solicitation, or simply not look for capital in from EU-based investors. However, with institutions in the EU representing a fifth of all institutional capital at work in hedge funds today, these managers may need to take on the extra stresses required to comply with the AIFMD in order to secure important investor capital. ”


In Depth

Q&A: Pantheon’s McCrary Says Private Equity Market ‘Robust’

Dec 17 2014 | 8:32am ET

Dennis McCrary is a partner at Pantheon, a private equity firm with $32.2 billion...

Lifestyle

Cohen Donates $1.5M To GOP Governors Association

Dec 10 2014 | 7:13am ET

The Republican Governors Association raised close to $25 million from October 1...

Guest Contributor

Q&A With Daniel Gallancy: Institutional Interest In Bitcoin Is Growing Steadily

Dec 12 2014 | 7:54am ET

Daniel Gallancy is founder and CEO of SolidX, a provider of total return swaps for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.