Multifonds reveals industry is positive for AIFMD
23 June 2014 Luxembourg
Image: Shutterstock
Multifonds’s latest survey on the impact of the Alternative Investment Fund Managers Directive (AIFMD) on the fund industry has shown a positive attitude to the legislation despite the 22 July authorisation deadline.
Respondents’ initial fears over AIFMD appear to have subsided as the challenges and predicted costs have significantly reduced and the industry is realising the potential opportunities.
Compared to previous years, the costs of AIFMD are far lower and 68 percent of those who completed the survey now expect depository costs to be less than 2.5 basis points (bps).
The 2.5 bps figure is a 50 percent reduction in estimates from 2013, where 77 percent thought depository costs would be in the region of 5 to 25 bps.
With cost expectations significantly lower, 82 percent have greater confidence that non-EU managers will now look to set up European operations to take advantage of AIFMD. In addition, only 53 percent now expect EU managers to leave Europe to setup offshore structures to avoid additional costs, a drop from 77 percent last year.
The survey revealed that 72 percent believe that one of the biggest advantages will be the AIFMD passport that will help gather more assets in Europe. Once the passport builds momentum, the fund domiciles in Luxembourg and Ireland look to benefit most.
A majority of 82 percent believe the AIFMD looks set to achieve its goal of improving protection for investors.
In the meantime, 66 percent of respondents agree that reporting to regulators will be their biggest challenge.
Keith Hale, executive vice president for client and business development at Multifonds, said: “As a regulation that came in response to the financial crisis in an attempt to regulate hedge funds, AIFMD seems finally to be emerging as a regulation that will bring some long term benefits to the industry.”
“In previous years, the unclear cost of complying with AIFMD presented a real concern—the presumed high cost levels would be the tipping point for the directive’s ultimate success or failure. With depository costs in particular now looking to be far lower than expected, this year’s survey shows that those concerns have subsided and the outlook is more positive for AIFMD.”
Hale continued: “While the outlook for AIFMD now looks more positive, regulatory reporting still presents an immediate challenge to firms that now need to report on a wider range of information. Fund managers must figure out how to marry their multiple systems together and then aggregate, store and report the resulting data.”
“We found that only 33 percent of the fund managers responding have provisions in place so far for the reporting aspects of the directive, which suggests that while the outlook for AIFMD is positive, there is still work to be done to implement the regulation effectively.”
Respondents’ initial fears over AIFMD appear to have subsided as the challenges and predicted costs have significantly reduced and the industry is realising the potential opportunities.
Compared to previous years, the costs of AIFMD are far lower and 68 percent of those who completed the survey now expect depository costs to be less than 2.5 basis points (bps).
The 2.5 bps figure is a 50 percent reduction in estimates from 2013, where 77 percent thought depository costs would be in the region of 5 to 25 bps.
With cost expectations significantly lower, 82 percent have greater confidence that non-EU managers will now look to set up European operations to take advantage of AIFMD. In addition, only 53 percent now expect EU managers to leave Europe to setup offshore structures to avoid additional costs, a drop from 77 percent last year.
The survey revealed that 72 percent believe that one of the biggest advantages will be the AIFMD passport that will help gather more assets in Europe. Once the passport builds momentum, the fund domiciles in Luxembourg and Ireland look to benefit most.
A majority of 82 percent believe the AIFMD looks set to achieve its goal of improving protection for investors.
In the meantime, 66 percent of respondents agree that reporting to regulators will be their biggest challenge.
Keith Hale, executive vice president for client and business development at Multifonds, said: “As a regulation that came in response to the financial crisis in an attempt to regulate hedge funds, AIFMD seems finally to be emerging as a regulation that will bring some long term benefits to the industry.”
“In previous years, the unclear cost of complying with AIFMD presented a real concern—the presumed high cost levels would be the tipping point for the directive’s ultimate success or failure. With depository costs in particular now looking to be far lower than expected, this year’s survey shows that those concerns have subsided and the outlook is more positive for AIFMD.”
Hale continued: “While the outlook for AIFMD now looks more positive, regulatory reporting still presents an immediate challenge to firms that now need to report on a wider range of information. Fund managers must figure out how to marry their multiple systems together and then aggregate, store and report the resulting data.”
“We found that only 33 percent of the fund managers responding have provisions in place so far for the reporting aspects of the directive, which suggests that while the outlook for AIFMD is positive, there is still work to be done to implement the regulation effectively.”
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