Wednesday, 17 December 2014
Last updated 3 hours ago
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. ”
Dec 1 2014 | 10:21am ET
As 2014 winds down, Northern Trust Hedge Fund Services executives took some time to share their outlook on trends facing the industry in 2015. Read more…
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