Alternative fund managers regard AIFMD as business threat
The challenges fund managers face complying with the Alternative Investment Fund Management Directive (AIFMD) are widely considered to be a threat to their business, according to a survey from Deloitte, the business advisory firm.
The survey, which polled 23 hedge, private equity and real estate fund managers collectively managing £175bn of assets, found that nearly three-quarters (72%) of surveyed managers view AIFMD as a business threat.
The biggest concerns for fund managers are depositary costs (84%), delegation (78%), changes to contractual arrangements and routes to market (67%). Deloitte said that, together, these factors reduce the attractiveness of Europe as a place to do business.
The survey also found that AIFMD will increase transparency for investors. More than half of respondents (53%) plan to provide investors with additional information as a result of AIFMD’s regulatory reporting requirements.
However, increased transparency and investor protection will be counterbalanced by less choice and less competition in the market, increased expense ratios, confusion over leverage figures and longer redemption terms in some cases, Deloitte found.
Smaller managers, private equity and real estate are more likely to see AIFMD as a business threat. Those companies that regard AIFMD as an opportunity manage at least £1bn of assets.
Stuart Opp, lead investment partner at Deloitte, said: “Managers are facing significant organisational and operational change under AIFMD with far-reaching business consequences.
He said the cost of doing business in Europe is set to rise disproportionately for smaller managers who have less internal resources to deal with the compliance responsibilities.