Spain raises protectionist fears – FT
Hedge funds and private equity groups have raised concerns about the risk of creeping protectionism in proposals made by Spanish diplomats to re-write European Union legislation to regulate their industries, report Nikki Tait and Martin Arnold.
The FT journalists found that the compromise proposal is still not ticking all the right boxes. Here’s an excerpt..
The Bogleheads forum is buzzing with news that Vanguard has set up an Alternative Strategies Fund in Dublin and filed for “exemptive relief” to allow its US Managed Payouts Funds to invest in the newfangled creature.
Vanguard is cherished by its investors partly for sticking to simple investing formulas that keep costs as low as possible. It is unsettling for them to see the mutual fund group setting off down a path labelled “alternative”. It smacks of hedge funds and other horrors.
Apparently more than a thousand amendments have been tabled for the Alternative Investment Fund Management directive, Brussels’ attempt to bring private equity and hedge funds under its loving control.
This unprecedented level of rewriting during the legislative process is a testament to the inexorable sway of the alternative asset management industry. The original, draconian, draft of the AIFM was seen as a shy at the ever popular Aunt Sally of hedge funds, or ‘locusts’ as they are known in Germany. The usually painstaking and thoughtful asset management unit of the European Commission’s internal markets division had apparently come under political pressure to bring out a hardhitting draft directive in a hurry.
At leisure, however, even the European Parliament found regulating a European hedge fund industry too harshly might not be that good an idea. Its own impact study found implementation of the proposed directive as it stood could result in a 0.2 per cent contraction in the combined GDP of the European Union.
Possibly, however, the initial announcement and pained squawks for the industry were enough to satisfy the hedge fund haters, and now the tedious work of actually piecing together something actually workable can be done out of the glare of the media spotlight.
Certainly the number of journalists prepared to dig through all 1000+ amendments is likely to be as slim as the number of readers prepared to read about them.
Consumers have low levels of financial literacy
Are we financially savvy enough to make the right decisions about how to invest for retirement or calculate mortgage payments or avoid the danger of repossession?
Not enough people are, according to the OECD. In a recent study the organisation found consumers not only have low levels of financial literacy preventing them from making informed financial decisions but they often overestimate their knowledge and skills.
Now Allianz has launched a website where people can find out about a whole range of financial terms to help their decision making, from estate planning to merging portfolios after marriage. There’s even a chance to trace how the price of coffee has increased in the past 30 years or how it might change in the future.
And if that doesn’t help to demystify some of the jargon then try the Financial Times lexicon.
It seems the European Commission has vanishingly few supporters of its proposed directive on alternative investment fund managers.
Reporting back from a Eurofi conference in Sweden, at an Efama one in Brussels, Eddy Wymeersch, chairman of Cesr, says eight of ten people on the panel discussing the issue in Sweden thought the draft needed major revision. There is particular concern about its scope. It appears sovereign wealth funds could fall within the remit of the AIFM – which would be nonsensical, according to Mr Wymeersch.
There should be different regimes for different types of funds, he says.
Will the Commission accept it has got this one wrong? Or is it determined not to back down?
When it was just the alternative investment industry complaining and threatening to leave for friendlier shores, the Commission perhaps took the view this was vested interests talking and who cared if the hedgies left for Switzerland?
With a growing chorus of dissent from investors and regulators, does the case for re-examining the proposed legislation get stronger?
Poul Nyrup Rasmussen, self-styled bogeyman of alternative investment managers
It seems the discussions on the European Commission’s much reviled draft directive on alternative investment fund managers are taking place after the event rather than before, as is usually the case with EU legislation.
The Financial Services Authority, the UK regulator, is focusing on this one topic in its asset management conference tomorrow. This follows last week’s debate, held in London’s Guildhall, between Poul Nyrup Rasmussen, self-styled “bogeyman” of alternative investment managers, and Lord Myners, the UK’s City Minister.
Just about everyone would like to make some amendments to the proposed EU regulations for the alternative investment industry, from hedge funds to governments, industry consultants and pension schemes.
The latest laments come from Mercer, the pension consultants, and their pension fund clients who agree the industry needs improvement and better supervision but call for Brussels to take a broader look outside the EU to see what is happening to the industry on a global regulation front.
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.
Was it all a dream?
I had to pinch myself to make sure I was awake. I was having lunch with the head of equities from a German fund manager at a Conran restaurant near Tower Bridge. I had asked what trends he saw and the answer flowed as smoothly as the sparkling Perrier.
“I predict a convergence between traditional and alternative fund managers, as long-only managers start to incorporate the new techniques available under Ucits into their toolkit. There is also a blurring between institutional and retail – all these boundaries are blurring,” he said.
This visionary also thought it was possible some investors would ask for more account to be taken of sustainability principles in investing, while he had heard of ETFs, but didn’t think they were likely to take off.
It was as if the whole of the last 18 months had been a dream.
Bacon and eggs: how's YOUR breakfast doing?
Breakfast is traditionally said to be the most important meal of the day, but can you track how well yours is doing?
In the cornucopia of customised and specialised indices, it is astounding that no one has yet come up with a family of breakfast indices. Surely in the innovative and imaginative world of exchange traded funds and commodities, someone is planning this.