The pros and cons of AIFMD
22 July 2013 is a day that will either unleash great potential from alternative investment funds and managers, or result in a regulatory quagmire.
22 July 2013 may become infamous if the industry scramble to put in place processes to meet the requirements of the Alternative Investment Fund Managers Directive are indicative of trouble ahead.
Cautious voices warn of the tremendous challenge of meeting requirements laid down by national law and national regulators in response to the European level Directive. However, there are already some that see significant potential benefits in the new regime.
“Until recently the entry into force of the AIFM Directive has often been seen as a threat to the development of the Ucits hedge funds universe. Contrary to all expectations the uncertainties and complexity linked to its application have rather been positive to the development of Ucits. Indeed and despite facing its own issues the Ucits Directive has the merit of being in place for many years and to offer a more predictable legal framework,“ says Louis Zanolin, CEO of Alix Capital in Geneva (pictured below).
The Ucits Alternative Industry Report for the first quarter of 2013, published by Alix Capital, highlighted the fact that pretty much all alternative Ucits strategies produced positive returns over the period. It also noted that both the number of funds and assets in Ucits absolute return funds continued to grow.
“23 new funds were launched during that period while 15 were closed. The total assets managed in single Ucits absolute return funds continued to grow during the first quarter of the year to reach €154bn, an increase of 11.6%. Compared to the level of assets managed twelve months ago, the growth rate reaches 28.9%.”
“Seven out of eleven strategies show an increase of assets during the first quarter. With +35.46% Multi-Strategy experienced the largest increase, mainly explained by the continuous success of Standard Life GARS fund that collected €5.4bn in Q1. With €22.53bn assets under management, the GARS fund now represents 14.6% of all Ucits absolute return assets.”
Interestingly, in light of the success of the Global Absolute Return Strategies fund, Standard Life Investments’ co-head of European Business & head of Nordic region Åsa Norrie has said that the firm is committed to ensuring investors have access to a broad spectrum of solutions. In fact, GARS is not always the best selling product or solution in certain European markets, she confirmed, for example, fixed income strategies sell more in some cases. However, she admitted that the success of GARS was a good way to open doors.