The potential exodus of US managers is a big concern for European pension funds, which have historically relied on the US alternative fund industry to provide diversity within their portfolios. The AIFM Directive, which comes into force in July, will significantly hamper the ability of non-European alternative managers to market their products directly to investors.
The Directive has a more immediate impact on US rather than European houses, as European hedge funds will be eligible to apply for a “passport” that allows them to market their products to European investors with ease.
Alternative fund managers outside Europe will not have this option until 2015 at the earliest. They are not eligible for the one-year transition period applicable to European fund companies that need more time to comply with the new rules.
US alternative fund groups have only recently started considering the impact of the directive as many have been preoccupied by US regulatory changes, including the Dodd Frank Act and new commodity trading rules.
A number of institutional investors in Europe, including several large Dutch and German pension funds, are angered that the directive could inadvertently hamper their access to a group of alternative fund managers.
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