Timothe Fuchs (pictured) is the CEO of eponymous Luxembourg-based Fuchs Asset Management. With regulation becoming so vast and complex, especially in Europe, he is in no doubt that alternative investment managers need all the help they can get with respect to the day-to-day operational and compliance demands of running AIFMD-compliant funds.
"Managers are getting fed up with all the reporting obligations they need to face each day. Also, and equally important, they are looking to use the European passport under AIFMD, especially now with the Brexit decision, given that large European institutional investors prefer regulated fund structures," says Fuchs.
As an authorised AIFM, Fuchs Asset Management provides the services and the knowledge (governance, risk management & compliance, portfolio management and distribution) for asset managers, private banks and family offices wishing to launch AIFMD-compliant vehicles.
"We only work with clients with proven track records in the strategies that they wish to manage in a regulated structure," confirms Fuchs, "and also those that already have their seed investors confirmed. In 90% of cases, just having a regulated fund structure is no guarantee at all that the manager will attract seed capital."
European AIFM platforms like Fuchs Asset Management play a vital role in removing the regulatory and operational burden from investment managers keen to attract European investors.
"This is how we can help, by finding the right service provider partnerships for the client," says Fuchs. The Fuchs Asset Management (`FAM') platform is open architecture. The team has relationships with service providers across Luxembourg and Europe to ensure that each client who launches a standalone fund and appoints FAM as the management company has the best solution in place.
"We want clients to focus on what they do best, which is managing their investment strategies. We don't want them to get distracted managing the day-to-day operations of a regulated vehicle. We want them to focus on generating performance and finding the best investment opportunities.
"Platforms like ours have a huge advantage, in this respect. Regulations change on a seemingly daily basis. We've now got UCITS V, FATCA, CRS, PRIIPs, there is talk of possibly AIFMD 2, not to mention the reports that are needed to local regulators in which funds are marketed. There are lots of risk management and compliance issues to deal with, and from a distribution perspective, even if the manager uses the European passport (using our AIFM license) they still have to make a specific submission to each EU Member State they wish to passport in to," explains Fuchs.
Fuchs says that investment managers need to have a clear idea of the type of investors they intend to target before launching a European fund under AIFMD.
"If you are going to target large pension funds, they will likely prefer the regulated SIF. If you are targeting family offices and HNW individuals, they will more likely accept the RAIF because they have less complicated internal fiduciary rules.
"Either way, managers need a clear view on what they intend to do with such a fund.
"Too many people launch SIFs, for example, on the expectation that they will attract investors. It is true that a regulated structure will help them find investors but it will not bring them automatically. I would offer the same word of caution to those clients now thinking of launching a RAIF," concludes Fuchs.
