Assessing the potential impact of the AIFMD on the UCITS industry: Threat or opportunity?

Abstract

This year has been momentous for the European fund industry, being marked by two milestone events: the 25th anniversary of the first Undertakings for Collective Investment in Transferable Securities (UCITS) Directive and the implementation of the Alternative Investment Fund Managers Directive (AIFMD). In the aftermath of the financial crisis of 2007–08, the aim of the European legislators when they drafted the AIFMD was to better monitor systemic risk and enhance investor protection; more specifically, they meant to regulate hedge funds and private equity funds that were blamed for allegedly spurring the financial turmoil. Ultimately, however, the AIFMD covers managers of all funds that are not UCITS. In other words, the European fund industry is now structured around two directives: UCITS and AIFMD. In fact, the AIFMD was designed as a complement to the UCITS Directive and its drafting was largely benchmarked against the UCITS rules. This paper proposes to examine the similarities and differences between these two directives and assess to what extent the new AIFMD might impact the UCITS industry.