Managers likely to move offshore as AIFMD arrives

Grand CaymanEuropean asset managers will consider setting up alternative investment funds offshore to put them outside the scope of the Alternative Investment Fund Managers Directive (AIFMD), many fund managers and administrators believe.

Seventy-seven per cent of respondents to a Multifonds survey say managers with fund investors outside of the EU may take this measure when the regulation enters into force on July 22. The option to avoid the AIFMD by offshoring is not open to funds with EU investors, though offshore funds can be marketed into the EU.

A similar number, 74%, say the costs of implementing the directive have risen since the European Commission published the Level II implementation text for the directive in December 2012.

Multifonds, a fund software provider, surveyed 64 managers and administrators which collectively manage and administer assets exceeding $13 trillion (€9.7 trillion) and $28 trillion respectively.

Many of those surveyed, 59%, also believe the AIFMD will become an international standard for global fund distribution, much like Ucits has become for more traditional products.

“One of the biggest question marks for AIFMD is around cost, and this may prove critical in determining whether AIFMD is ultimately a success,” says Keith Hale, an executive vice president at Multifonds. “Improving efficiency, in the light of this increased cost burden from both AIFMD and convergence, is the key challenge that administrators must overcome to thrive in today’s industry.”

On June 18 Luxembourg’s financial regulator, the Commission for the Supervision of the Financial Sector (CSSF), launched the application process for fund managers to be recognised as alternative investment managers under the AIFMD. At the same time, the CSSF issued a Frequently Asked Questions document on Luxembourg’s alternatives law, transposing the directive.

Ireland’s financial regulator, the Central Bank of Ireland, announced in May that it was accepting applications.

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