The European Union’s draft rules on alternative investments have drawn a storm of protest from hedge funds, equity funds and even investment trusts. Today, the global hedge fund industry association took the battle a step further.
Such a ruling will make it so difficult and expensive for non-EU funds and managers to access the EU market that it would have huge consequences, particularly in North America and Asia Pacific, the Alternative Investment Management Association warns.
Off come the gloves and out comes the P word. This smacks of protectionism says the association. OK, Brussels may not intend to be protectionist, it hastily adds, but that is the outcome nonetheless.
Andrew Baker, the organisation’s chief executive, reels off the global industry centres that will suffer. “US, Canada, Switzerland, Hong Kong, Singapore, Japan, Australia and South Africa will all be affected by this. This is not just an internal EU matter,” he says.
Among the industry’s worries are a narrower choice of funds for investors, who will also bear the brunt of increased costs.
Some industry watchers have gone further believing it could cause havoc to the industry in its present state, and also harm the EU’s competitiveness in the investment arena unless amendments are built into the proposed directive before its introduction in 2011.
That may be exaggerating a little but a far-flung shake-up bringing advantages but some downside is likely. Where do you stand on the directive? Is it protectionism by design or effect?