Comment by Joy Dunbar
When the Alternative Investment Fund Managers Directive
(AIFMD) became law in 2010 it would appear that the demarcation
point between it and the more established UCITS Directive had
This is because UCITS framework, which has a pedigree dating
back to the 1980s, was intended for retail investors while the
AIFMD is designed for professional investors.
Does the implementation of the AIFMD, which is expected to be
enforced by all EU member states in July this year, mean that
the bifurcation is now complete?
Some in the industry have predicted that that UCITS will revert
to being solely a retail fund structure and institutional money
will start to flow to AIFMD structures.
This is because the fund structure siblings have more
similarities than differences - with extra restrictions
applying to UCITS because it is aimed at non-professional
In theory bifurcation will happen once the AIFMD has been
But uncertainty, in terms of costs and implementation, could
put the cat among the pigeons.
The asset management industry does not know how much
implementing the new directive will cost and the costs of
running a UCITS-compliant fund are a lot clearer.
But anecdotal evidence suggests that UCITS could become
increasingly attractive for those asset managers who want to
launch funds because of its certainty and as it has built up a
reputation since the first fund launched using the framework 25
Investors will ultimately decide which structure they prefer
and the direction of investment flows.
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