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Money managers under the microscope

Pension funds warn of €1.5 bln regulation cost

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As the debate over the EU’s controversial and highly-politicized AIFM proposals on hedge funds and private equity rumbles on, there emerges more evidence that boosts opponents of the plans.

RTR28O54An article in Global Pensions highlights a letter to the European Parliament’s Committee on Economic and Monetary Affairs from Dutch pension funds and asset managers, saying the implementation of the AIFM in its current form could cost 1.5 bln euros annually.

The way this would happen, the letter argues, is that pension funds may change their asset allocation, switching out of all non-Ucits, non-EU assets to more traditional assets such as equities or fixed income.

There is potentially a large disparity in returns — 6.46 pct on equities and fixed income and 8.84 pct on non-EU, non-Ucits alternatives. When translated across pension funds’ assets, the loss in income is 1.47 bln euros.

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