Glossary · Operations and rules

What is the AIFMD?

The Alternative Investment Fund Managers Directive is the EU framework for managers of alternative funds. It covers authorization, reporting, risk controls and marketing to investors.

In practice

AIFMD regulates the manager rather than the fund. EU managers are authorized under it, while non-EU managers usually market through national private placement regimes, since the broader passport for them was never switched on. Requirements typically include a depositary or depositary-lite arrangement, Annex IV regulatory reporting and investor disclosures. Often confused with UCITS, which governs retail funds.

An example

Round numbers, not a real fund

Say a U.S. manager wants to market a fund to investors in 3 EU countries. It must work out which AIFMD route applies, and meet that route’s reporting and disclosure rules.

Why it matters

It decides whether and how a non-EU manager can market a fund in Europe, and it is regularly updated.

In the news

Related terms

Form PFForm PF is a confidential report that private fund advisers registered with the SEC file on their funds’ size, borrowing, investors and performance, to help regulators monitor risk.
Placement agentA placement agent is a firm a manager hires to find and pitch investors for a fund, usually paid a percentage of the capital it brings in.
PPMA private placement memorandum, or PPM, is the offering document that tells prospective investors about a fund’s strategy, terms, risks and manager.
Fund administratorA fund administrator is an independent firm that keeps a fund’s books, calculates its net asset value, processes capital calls and distributions, and handles investor reporting.
AML and KYCAML rules aim to stop money laundering. KYC, know your customer, is the checking of who an investor is and where its money comes from before a fund accepts it.

The terms, in the news each morning.

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