Investors want a regulated product, says Northern Trust
07 January 2015 London
Image: Shutterstock
Investors in alternative investment funds are increasingly demanding products that comply with new regulations, according to a survey by Northern Trust.
At a regulation seminar, 28 percent of fund managers said they believe investors are demanding fully compliant products. This is double the percentage that agreed with the same statement at the same event last year.
The survey results also showed concern among managers that the compliance effort is not yet finished, with 65 percent saying they feel their investors saw AIFMD as a compliance exercise only.
More than a quarter of attendees said it remains too early to tell whether AIFMD compliance will be an important part of their sales pitch to new investors.
Ian Headon, head of depositary regulatory and technical services at Northern Trust, said: “Investment managers launching new products are now seeing an increasing demand from investors for a combination of traditional offshore and fully regulated products.”
He added that investors are now looking for a fully regulated product and also a traditional offshore product.
“This is a gradual, incremental change in investor behaviour and will have a significant impact on the evolution of fund managers’ product offerings – regulation is here to stay, but this is a marathon, not a sprint.”
There was also concern over the impending implementation of UCITS V, with over a quarter also said it’s too early to say if the benefits of the regulation will translate to benefits for investors, and almost half expressing concern over the costs of compliance compared to long-term commercial benefits.
Hendon said: “The most successful managers will be those that break away from the pack, get ahead of this regulatory change, remove the uncertainty for their investors, and will cross the line ahead of their peers.”
The survey included 54 alternative investment fund managers attending the Northern Trust seminar on regulation in London.
At a regulation seminar, 28 percent of fund managers said they believe investors are demanding fully compliant products. This is double the percentage that agreed with the same statement at the same event last year.
The survey results also showed concern among managers that the compliance effort is not yet finished, with 65 percent saying they feel their investors saw AIFMD as a compliance exercise only.
More than a quarter of attendees said it remains too early to tell whether AIFMD compliance will be an important part of their sales pitch to new investors.
Ian Headon, head of depositary regulatory and technical services at Northern Trust, said: “Investment managers launching new products are now seeing an increasing demand from investors for a combination of traditional offshore and fully regulated products.”
He added that investors are now looking for a fully regulated product and also a traditional offshore product.
“This is a gradual, incremental change in investor behaviour and will have a significant impact on the evolution of fund managers’ product offerings – regulation is here to stay, but this is a marathon, not a sprint.”
There was also concern over the impending implementation of UCITS V, with over a quarter also said it’s too early to say if the benefits of the regulation will translate to benefits for investors, and almost half expressing concern over the costs of compliance compared to long-term commercial benefits.
Hendon said: “The most successful managers will be those that break away from the pack, get ahead of this regulatory change, remove the uncertainty for their investors, and will cross the line ahead of their peers.”
The survey included 54 alternative investment fund managers attending the Northern Trust seminar on regulation in London.
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