The barriers for investment created by the Alternative Investment Fund Managers Directive (AIFMD) are still preventing investors from reaching European funds, despite solutions becoming available, according to Aurum.
Kevin Gundle (pictured), chief executive of Aurum, says: “The regulatory developments we are witnessing today are creating one of the most challenging environments for investment managers and their investors that we have seen in the 20 years we have been investing in hedge funds. Since the AIFMD leapt onto the statute books in the Summer of last year it has created confusion and concern amongst virtually all groups either managing alternative investment funds (AIFs) or investing into them - whether or not they are based in the EU or overseas.
“Aurum recently conducted a survey of US-based hedge fund managers about their views and intentions around AIFMD which found that none of the managers had registered as AIFs, nor did they have any immediate plans to do so. This is an alarming confirmation of the fact that the protectionist consequences of the AIFMD are essentially creating extremely high barriers to entry to non-EU managers wishing to offer their funds in Europe. The news in Europe is only slightly more encouraging where managers are more familiar with the directive and most have factored it into their medium term plans, but it will nevertheless be some time before AIFMD Funds become commonplace.
“There is a real scarcity of AIFMD-compliant products available and less choice always results in a negative selection bias. The directive has served as a regulatory censor which will significantly reduce the available investment opportunities for EU investors wishing to gain exposure to non-EU hedge fund managers, with the unintended consequences being reduced choice, competition and opportunity. This had meant savers and investors may be denied the opportunity to generate outperformance at the time when they need it most.”