By Kavitha Ramachandran, Maitland – As the alternative investment market matures, investors are increasingly demanding far more information and transparency from fund managers in return for their capital. Transparency is the new name of the game. In this regard, the Alternative Investment Fund Managers Directive (AIFMD) may be viewed as a single piece of regulation, but its ultimate aims are more or less in line with other regulatory changes such as MiFID II/MiFIR and PRIPS. There will come a point where the reporting and transparency requirements demanded under the AIFMD will become the minimum accepted standard needed to attract investors.
It is within this context that we welcome Luxembourg’s status as an AIFMD-friendly jurisdiction and an ideal place in which service providers can set up compliant structures to support their clients’ growth into the significant EU alternative investment market. There is no doubt that Luxembourg has become the premier jurisdiction for domiciling alternative investment funds. It sets exacting requirements and demands high standards of skills and experience, substance and reporting transparency.
Maitland has operated in Luxembourg for nearly 40 years, ever since the company was founded in the Grand Duchy in 1976. We are a part of the Luxembourg professional landscape and it was a logical decision therefore for us to choose this jurisdiction to set up our AIFMD compliant solution.
Being an independent third party fund administration business we are able to provide both fund managers and investors with the necessary transparency, independent oversight, controls and segregation of functions, as well as the benefit of our technological platform for reporting requirements, all of which are required under the AIFMD.
In May 2014 MS Management Services SA, a Luxembourg-based subsidiary of the Maitland group, was authorised by the CSSF to act as a third-party Alternative Investment Fund Manager (AIFM) for alternative investment funds as well as to the new Maitland Alternative Investment Fund (AIF) platform, MS SICAV SIF.
Fund clients can focus on their core activity of portfolio management but outsource to MS Management Services all the duties envisaged in the AIFMD including risk management, compliance monitoring, regulatory reporting and investor due diligence.
Maitland has also established its own comprehensive AIFMD compliant SIF (Specialised Investment Fund) platform, MS SICAV SIF, for product construction and innovation in the EU. This is a Luxembourg domiciled alternative investment umbrella fund with multiple sub-funds each with flexible investment strategies allowing managers to invest in a range of alternative asset classes and have their “own brand”. The SIF has appointed a depositary and auditor that are well established and regulated in Luxembourg with a global presence. Both are independent of Maitland.
Many alternative funds and their managers are currently weighing up the options in terms of the AIFMD. It may seem overwhelming to some to implement the changes needed to attract investors in the EU and they may decide against this but before they do so, we would strongly encourage them to remember that the AIFMD is likely before long to become the minimum accepted standard.
So if the costs are too high to go it alone initially, managers should consider partnering with a service provider as a way of testing the waters before developing a full-fledged AIFM presence later.
