As the 22 July 2014 authorization deadline for the AIFMD approaches, new research from Preqin, based on a survey of 150 hedge fund managers, reveals that the majority of hedge fund managers (59%) think that the AIFMD will have a negative effect on the hedge fund industry, compared to 53% in December 2013 and 29% in December 2012.

A further 22% think it will have no impact and only 20% think it will have a positive impact. US-based hedge fund managers are the most negative towards the AIFMD, with 71% stating it will have a negative impact on the industry.

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In contrast, Europe-based managers, excluding those in the UK, have the most positive outlook towards the Directive, with 40% of these managers stating they think it will have a positive impact on the hedge fund industry and only 45% stating they think it will have a negative impact.

Managers’ Concerns about Regulation and the AIFMD:

  • The largest proportion of hedge fund managers (43%) named compliance costs as their primary concern regarding the AIFMD. Europe-based managers, excluding those in the UK, were the most concerned about compliance costs, with 53% stating this as their primary concern.
  • No fund managers surveyed reported that the costs of regulation were lower than expected, and cost exceeded expectations for three-quarters of fund managers in Europe, and in Asia and Rest of World.
  • Managers based in Asia and other countries outside of the US and Europe are most concerned about compliance costs surrounding the AIFMD (39% of these managers named this).

Hedge Fund Manager Compliance with the AIFMD:

  • 58% of Europe-based managers, excluding those in the UK, are already compliant with the AIFMD or will be by the deadline; in the UK this figure is 64%.
  • 14% of UK-based hedge fund managers have submitted their application to the FCA but do not expect their fund to be approved by the deadline.
  • 40% of US-based managers stated they do not plan to actively market in the EU, relying on reverse solicitation in the short term.
  • Nearly half of hedge fund managers with more than $1bn in assets under management are already compliant with the AIFMD; these fund managers are likely to have a global client base, including those in the EU, and therefore have the need to comply, as well as the resources to do so.

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