Hedgeweek: Luxembourg leads in AIFMD stakes

24 October 2014

Luxembourg has become the premier jurisdiction for domiciling alternative investment funds. It sets exacting requirements and demands high standards of skills and experience, substance and reporting transparency.

As the alternative investment market matures, investors are increasingly demanding far more information and transparency from fund managers in return for their capital. Transparency is the new name of the game. In this regard, the Alternative Investment Fund Managers Directive (AIFMD) may be viewed as a single piece of regulation, but its ultimate aims are more or less in line with other regulatory changes such as MiFID II/MiFIR and PRIPS. There will come a point where the reporting and transparency requirements demanded under the AIFMD will become the minimum accepted standard needed to attract investors.

Many alternative funds and their managers are currently weighing up the options in terms of the AIFMD. It may seem overwhelming to some to implement the changes needed to attract investors in the EU and they may decide against this but before they do so, we would strongly encourage them to remember that the AIFMD is likely before long to become the minimum accepted standard. So if the costs are too high to go it alone initially, managers should consider partnering with a service provider as a way of testing the waters before developing a full-fledged AIFM presence later. 

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