On the 1st July 2011, the Alternative Investment Fund Managers Directive (AIFMD) was published in the Official Journal of the European Union. This Directive will regulate the activities of entities engaged in the management and administration of funds that are not UCITS funds. It also lays down rules for the marketing of those funds to professional investors within the EU.
On the same day, the Luxembourg Government approved a draft bill of law modifying the law on Specialized Investment Funds (SIF), the investment vehicle of choice for non UCITS in Luxembourg. Although not yet the official transposition act, this bill purports to adapt the SIF legislation to certain aspects of AIFMD, notably in terms of delegation and risk management as well as integrate certain improvements (such as cross-compartment investments) that were previously introduced for UCITS. These changes will also enable the Luxembourg legislator to fine tune the level of regulation applied to SIFs in Luxembourg, further improving the overall quality of that product which has experienced a tremendous success with more than 1,200 SIF launched since 2007.
“Combined with the CSSF’s (Commission de Surveillance du Secteur Financier) practice to provide feedback within 10 working days on applications to launch, the SIF is now perfectly designed to become the preferred vehicle for asset managers wishing to benefit from the passport that the AIFMD will grant to alternative fund managers as of 2013” commented Marc Saluzzi, chairman of the Association of the Luxembourg Fund Industry (ALFI).
According to EFAMA statistics, Luxembourg is today the second biggest domicile for non-UCITS funds in Europe. At the end of May 2011, 50 per cent of the 3749 Luxembourg domiciled funds were non-UCITS (1266 SIFs; 619 UCIs).
The bill of law will now be submitted to Parliament for approval and is expected to enter into force at the end of this year, in time for the beginning of the AIFMD transposition process into the Luxembourg law.
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