Property investors expect AIFMD to shrink number of fund managers

Euro signThe new regulations for alternative investments will result in fewer fund managers, an audience of 50 property fund managers and others in the alternatives world predominantly believes.

A poll taken at a briefing about the Alternative Investment Fund Managers Directive (AIFMD) shows that 63% of the attendees believe there will be fewer managers as a result of the regulatory landscape, which comes into force on July 22 this year.

The expectation is that AIFMD will lead to consolidation of fund managers, resulting in fewer entities.

Jan Hoffmeister, co-founder of Drooms, a data service provider, says the reduction is to do with economies of scale, as smaller managers finding it tough coping with regulatory costs choose to merge with larger ones.

“In order to be compliant there is a price tag to be attached to this… and some of the smaller firms will think about mergers.”

Although funds below a certain level of assets under management will not have to comply with the directive, Hoffmeister says they may also disappear because investors would prefer the comfort of investing in an AIFMD-branded fund.

The poll results come from a briefing by Knight Frank, a property consultancy, and Drooms. Wealth managers and private equity firms were also among the voters.

Voters also revealed that 17% of attendees had not yet taken any action to prepare themselves for the AIFMD. The poll suggests that the alternative-investor industry’s main problem with preparedness is “documentation, transparency and reporting” as 50% say this is the most pressing concern of the topics covered at the briefing. A further 23% say “identifying the manager” is more pressing. However, 37% say they have identified which funds will fall under the AIFMD and who the managers will be.

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