By Simon Miller

Nearly three quarters of fund managers regard the Alternative Investment Fund Management Directive (AIFMD) as a threat according to a survey released today.

The Deloitte survey said 72% of managers thought AIFMD was a business threat with 84% worried about depositary costs while 78% cited delegation as a problem.

Combined with 67% concerned about routes to market, collectively these reduce the attractiveness of Europe as a place to do business,

The survey also found that smaller managers, private equity and real estate were more likely to see AIFMD as a business threat. Those companies that regard AIFMD as an opportunity manage at least £1bn of assets.

Stuart Opp, lead investment partner at Deloitte, said managers were facing significant organisational and operational change under AIFMD with far-reaching business consequences.

He commented: "The cost of doing business in Europe is set to rise disproportionately for smaller managers who have less internal resources to deal with the compliance responsibilities. There will clearly be a trade-off for managers to consider in determining their approach to AIFMD and managers will respond differently, depending on their distribution strategy and client profile."

Although the survey showed that AIFMD would increase transparency for investors with more than half of respondents (53%) planning to provide investors with additional information as a result of AIFMD’s regulatory reporting requirements, increased transparency and investor protection would be counterbalanced by less choice and competition in the market, increased expense ratios, confusion over leverage figures and longer redemption terms in some cases, according to Opp.

He added: "“Given the widespread concerns with the directive, it comes as no surprise that a sizeable majority of respondents view AIFMD as a business threat. The depositary, marketing and remuneration rules required under AIFMD will have significant business impacts on fund managers."

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