The Managed Funds Association is bankrolling a campaign by the London-headquartered Alternative Investment Management Association to overturn parts of a European Commission draft law that could potentially choke off European investment in U.S. managers.
Officials at both groups confirmed the financial contribution made by MFA members, but neither group would provide a figure. The MFA has embarked on a massive fundraising campaign in recent years and its contribution to AIMA is understood to be substantial.
The biggest sticking point for both organizations is a section of the draft directive, as it is called, concerning the marketing of alternative funds that are based outside the European Union. An MFA official noted that as it stands, a U.S. hedge fund with a London office would not be able to run money for EU investors, despite being authorized by the U.K.'s Financial Services Authority. Likewise, investors based in the European Union would likely be prohibited from investing in managers outside the region, a scenario that worries many institutional investors. A letter co-signed by 10 Dutch pension funds in January estimated that such a provision would cost them roughly €1.5 billion a year, since they would be forced to reallocate assets invested in non-European Union alternative investment funds into less appealing assets such as equities and bonds.
“The MFA has a long history of engagement in European regulatory matters and we’re happy to be working with AIMA on a coordinated industry response to the EU directive,” said Darcy Bradbury, chair of the MFA and director of external affairs at D.E. Shaw. “Given the broad reach of the directive’s proposals and our members’ significant investor base on the European continent, it makes sense to collaborate on matters concerning global financial regulation.”
An MFA official noted that advocacy is a relatively new area for AIMA, which traditionally has been better-known as an educational organization. AIMA’s prominence on the ground in Europe is a benefit, but the two associations view the campaign as a joint venture, the MFA official added.
—Robert Murray
