ESMA Alternative Investment Fund Managers (AIFM)

The Alternative Investment Fund Managers Directive (AIFMD) is a European Union (EU) regulation that applies to hedge funds, private equity funds, and real estate funds. The institutional funds that fall under the AIFMD were previously outside of EU financial regulations for disclosure and transparency, including the Markets in Financial Instruments Directive (MiFID). The AIFMD sets standards for marketing around raising private capital, remuneration policies, risk monitoring and reporting, and overall accountability. The AIFMD is part of an increased push for investor protections that the EU undertook just prior to the 2007-08 financial crisis, whereupon efforts were increased due to the systematic risks the crisis revealed.