Insights / 08 October 2014
Crestbridge forum debates important AIFMD survey findings
Crestbridge welcomed an invited group of highly influential fund sector specialists to hear the latest research on AIFMD implementation conducted by IFI Global. The panel featured a dynamic line-up of leading figures from Luxembourg and abroad: Daniela Klasén-Martin (Managing Director Crestbridge Luxembourg), Jérôme Wigny (Partner, EHP), Graham Goodhew (Director, JP Morgan Asset Management (Europe)), Marc Kramer, (Partner Curtis, Mallet-Prevost, Colt & Mosle) and Lisa Backes (Managing Director, YCAP Asset Management). Under discussion were the initial findings from the study conducted by IFI Global presented by Simon Osborn (CEO, IFI Global).
IFI Global had examined opinions on the impact of the introduction of the Directive in the last few weeks before the transition period for its implementation expired. Speaking on behalf of Crestbridge, Daniela Klasén-Martin said; “The goal of this research was to identify key issues arising from the introduction of the Directive and included 73 alternative managers who in total were managing in excess of US$2.5 Trillion. Crestbridge strives to be at the forefront of the developments of the Directive and we want to help ensure the alternatives industry successfully adopts the new regulations with minimum impact on investors and managers.”
The panellists’ discussion on the evolution of risk management as a consequence of the AIFMD was a central theme but views between panellists were varied.
Jerome Wigny affirmed, “The added value of the AIFMD is not just the risk management but risk oversight for the whole structure.” Daniela Klasén-Martin concurred saying, “a complete risk management process goes beyond financial risk management and should include operational risk and oversight of delegations. It is clear from some of the responses that several alternative asset managers are combining risk management and compliance responsibilities. This is far from ideal since these are separate functions, together with internal audit, which constitute the basis of an effective control system and provide valuable support for Directors to ensure investor protection“
“AIFMD implementation has not made a big change in our risk management process as we have always committed a significant portion of time to risk management at YCAP,” commented, Lisa Backes. “We also don't agree that only large asset managers will be the winners. There remains a role for smaller boutique asset managers providing niche strategies.”
Graham Goodhew advised, “This is not a tsunami of regulations as it has been described by many, but a change of sea-level. Things will not return to where they were before.”
Participants were surprised that the surveyed fund managers did not offer a view that the AIFMD would help investors. Parallels were made to reactions to the introduction of UCITS, which initially people had been critical and dismissive of, but twenty five years later there is no denying the benefits that it has had.
Marc Kramer commented on the London-centric and hedge funds orientated nature of the research and questioned whether any investors were interviewed, adding, “I think German investors do see the benefits of the AIFMD. Ultimately the AIFMD opens opportunities for institutional investors and managers. Now that the arena is regulated there is a huge benefit for investors to look into alternatives.”
Regarding third party management companies, Daniela Klasén-Martin stated, “The positive response to the role of Third Party ManCos is to be welcomed. The size of the fund is not the main driver but a strategic decision to focus on core asset management activities.” She added, “I believe there is confusion between risk measurement and risk management. Asset managers are focusing on the former to the detriment of the latter. It is the role of the independent risk management function to ensure a shift of focus, which investors will benefit from in the long term.”
Discussions on the subject continued during the lively reception afterwards, which provided a good opportunity for guests to network in the charming grounds of the world heritage site.
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The full research report is available here