Study: AIFMD moving funds onshore

The number of alternative investment funds domiciled within Europe has increased by 10% since 2010, according to a recent study.

More GPs are domiciling their funds within Europe to take advantage of the Alternative Investment Fund Managers Directive’s marketing passport, said a report published on Tuesday by the Association of the Luxembourg Fund Industry (ALFI), and carried out by management consultancy firm Oliver Wyman.

Since 2010 the number of alternative investment funds domiciled within Europe has increased by 10 percent, and these funds’ assets under management have risen by 13 percent.

“Whilst many were against it [the AIFMD] when it was first introduced because of the fear of high compliance costs and additional complexity, this piece of regulation has brought significant benefits, allowing EU domiciled managers to market authorized funds across the EU,” said Marc Saluzzi, ALFI chairman.

Yet, pfm has only heard of a few managers moving into Europe, such as Royalton Partners who moved from the Cayman Islands to Luxembourg, as many offshore managers were happy to avoid the directive and its compliance burden.

Sources say even more GPs would have been likely to move onshore if the LP community was more engaged with the directive and research has shown that investors do not require their GPs to be AIFMD-authorized in order to make a commitment.

However, head of legal at fund of funds Pantheon, John Morgan, previously said he has seen request for proposals from large state pension funds looking for funds that are AIFMD-authorized.

Ian Headon, vice president at Northern Trust, too said “the AIFMD question is starting to come up” from LPs but added it has not been consistently seen in investor due diligence yet.