At the latest conference on alternative investments organised by the Association of the Luxembourg Fund Industry (Alfi) last month, its chairman Marc Saluzzi declared the general thrust of AIFMD was pushing the industry in a way that Luxembourg itself ought to feel confident about.

This local confidence on the opportunities set to derive from AIFMD are exemplified in the early move to transpose the directive into Luxembourg law, including changes to its tax code and the introduction of additional limited partnership structures, more similar to those in Anglo-Saxon jurisdictions.

The conference was also a way for Alfi to emphasise that the discussion around alternative investment funds is not just about hedge funds. Real estate and private equity figured prominently on the agenda.

Alfi’s Luxembourg Real Estate Fund Survey 2012 suggested the number of funds in the sector has grown by an average of 27% annually since 2006. The survey noted that the number of real estate investment funds (REIFs) launched through calendar 2011 was twice that of 2010, or 26 direct REIFs, taking the total to 170 funds.

Level 2 fears

Much depends on the so-called Level 2 measures from the European Commission that the industry was still awaiting at the time of the conference. Of particular concern was to what extent it could water down the guidance given by Esma, the European Securities and Markets Authority, to European policy makers on the issue of regulating alternative investment funds (AIFs).

And, while the broadbrush aspects of AIFMD may be grudgingly accepted by the majority of stakeholders in the AIF space, there is one key set of players that still expressed significant concern about how the directive could undermine their business models.

Jean-Michel Loehr, chief Industry & Government Relations, RBC Investor Services Luxembourg, and Bill Scrimgeour, global head of Regulatory & Industrial Affairs, HSBC Securities Services in London, both took the position that from their perspective, the AIFMD contains significant flaws when it comes to the role of the depositary.