Lansons Conversations

Not time to panic – yet

“City’s fund grip slips” – it seems that even before the AIFM Directive comes into force its already having an impact! London is losing out to New York, as our share of assets slipped by about the same amount that the Big Apple’s has grown!

Hmmmmmmm. Forgive me if I’m not entirely convinced. I don’t mean that in some heretical sense that I don’t want to see the Directive amended wholesale. I just think it might be jumping the gun somewhat. Hedge funds have been experiencing some strong inflows of late, albeit the net figures are slightly distorted by the continued restrictions on redemptions. Performance has also been good; very good in some strategies. And a quick glance at the tables suggests that’s its US-based funds that have been dominating performance of late. So perhaps there’s another reason why the share of assets has shifted as it has. There’s no doubt that hedge fund managers are looking around at new locations, but has enough happened to actually have impacted the numbers?

As it stands, the Directive – coupled with  increasing tax rates – could do a huge amount of damage, not just to London but the EU as a whole. When the AIFM Directive was announced it was quickly derided as a “Franco-German” plot. If it was, then I think it has backfired hugely on these mythical Franco-German Eurocrat plotters. But as they flick through the papers this morning, sipping their coffee and twiddling their mythical moustaches, they will draw some solace from the rather nervous, hair-trigger reaction to these statistics from London.