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The AMF favours the principle of a European passport for OEREFs funds, which would function similarly to a UCITS passport and calls to establish a European framework offering a high level of investor protection.
The elements concerning the formation of funds under the new regime, as well as their operational and asset composition rules, need further clarification. Special attention must be paid to the rules governing the spreading and limitation of risk, as well as those on borrowing and leverage. In particular, the AMF considers that the 60% debt ratio proposed by the group is too high and should be capped at 40% of the property pocket of the portfolio.
Based on a mandate from the European Commission, CESR should begin work on establishing the characteristics of the harmonised regime with a view to ensuring optimum security for retail investors, AMF recommends.
AMF also notes that liquidity-management issues must be designed and managed in a way that they can provide the degree of liquidity commensurate with the frequency of their NAV calculations provided in their prospectus. Therefore, the 10% liquidity cushion would not be sufficient on its own, without any other mechanism, to contend with massive outflows in a market downturn.
The choice of legislative arrangements, i.e. a standalone directive or a special section in the UCITS Directive, should be left up to the European Commission, AMF notes.