Access to Foreign Expertise (AIFMD)

AIFs are part of a global industry, and EU allocators rely on access to alternative investment fund managers (AIFM) both inside and outside the EU to secure appropriate diversification and returns. For example, during the market turbulence caused by COVID-19, 85% of EMEA-based investors found that their hedge fund allocations delivered the diversification they needed. 

There are two primary ways that non-EU managers, such as those based in the U.S., can serve EU investors: 

• Portfolio delegation, which allows portfolio management of delegated funds from EU AIFMs.
• National private placement regimes (NPPRs), which non-EU managers use to market directly to institutional investors in the EU. 

Eminence encouraged the European Commission and EU policymakers to avoid significant changes to the Alternative Investment Fund Managers Directive (AIFMD). Specifically, Eminence encouraged the EU to maintain NPPRs and to refrain from introducing new rigid criteria for delegation arrangements. Eminence called on EU policymakers to consider the following when proposing changes to AIFMD:

• Predictability – To encourage growth of the EU alternative investment industry the EU must establish predictable rules for managers and EU institutional investors. 
• Proportionality – The rules that govern AIFMs must be proportionate compared to other sectors within the financial services industry.
• Global alignment – To promote the competitiveness of the EU alternative investment industry the EU should align AIFMD with globally recognized standards. 
• Evidence-driven policy – To preserve EU market efficiency and integrity, the policymakers should only change aspects of AIFMD where there is evidence of a market or regulatory need.