The AIMA Guide to Liquid Alternative Funds summarises a range of issues that hedge fund firms and other asset managers face in setting up a UCITS fund in Europe or a mutual fund registered under the Investment Company Act of 1940 in the US, known as a ’40 Act fund.
The guide outlines practical considerations for managers wishing to establish liquid alternative funds, takes account of major regulatory and tax developments, and addresses some of the different requirements and practices affecting funds established in Ireland, Luxembourg and the US, among the most common domiciles for liquid alternative funds.
A range of issues are covered in the guide including investment strategy restrictions, liquidity, operational and governance matters, distribution, tax and financial reporting, the role of service providers and revenue streams and costs.
The guide, which directly compares UCITS and ’40 Act fund structures and requirements, is published at a time of steady growth in liquid alternative funds in Europe and the US. A survey published earlier this year by AIMA, the MFA and KPMG found that roughly one-in-four managers planned to launch at least one alternative UCITS fund over the next five years, while about 15% of managers said they planned to launch at least one ’40 Act fund by 2020.
Jack Inglis, CEO of AIMA, said: “Investment managers that are used to the regulatory environment of private funds should expect to face new operational and regulatory challenges in a liquid alternative fund. But they are also likely to find significant new growth opportunities at a time when many individual investors, pension funds and other institutional investors are looking for ways to increase the liquidity and risk-adjusted performance of their portfolios.”
Executive summary
© AIMA - Alternative Investment Management Association
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