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Five reasons for choosing a third-party AIFM

6 September 2021

Maelle Lenaers

Head of Luxembourg AIFM

Maelle Lenaers

Head of Luxembourg AIFM

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If you want to outsource risk management, launch new products or test market appetite for a new fund, an Alternative Investment Funds Manager (AIFM) service can provide a quick, easy answer

Investment managers and fund managers face significant regulatory and compliance obligations to comply with the Alternative Investment Funds Managers Directive (AIFMD). But help is at hand from third-party AIFM solutions.

These can assist everyone from start-ups looking for cost efficiencies to established managers without an EU base looking to expand into Europe. Legislation requires managers to separate portfolio management and risk management – but AIFM third-party structures can do far more.

Why is third-party AIFM becoming more popular?

Asset managers face a constantly changing global marketplace, the burden of strict regulation and the cost of launching new funds. So increasingly they are turning to third-party AIFM to handle the burdens of regulatory compliance, risk management and other services.

What are the advantages of third-party AIFM services?

A third-party AIFM solution can bring both cost efficiencies and market experience. The cost efficiencies are helpful for smaller managers and start-ups but can also benefit non-EU managers looking to launch funds for investors within Europe.

What should investment managers and fund managers consider when choosing an AIFM?

Here are five points to consider:

1. What do you need the AIFM to do?

An AIFM can provide a competitively priced, tailored and risk-based governance service, guiding you through the complexity of compliance, authorisation and regulation. This leaves you free to run your portfolio and plan new launches.

If you want to raise capital from European investors, an AIFM will give you access to the European market through the AIFM marketing passport.

2. What benefits is the third-party AIFM offering?

Your AIFM partner will offer independent oversight and risk management for investors and help you monitor and manage the changing regulatory landscape.

You may want a third-party AIFM to manage illiquid alternative asset classes such as private equity, real estate, private debt, infrastructure, venture capital and funds of funds.

It is important to choose a third-party AIFM with:

  • A track record
  • The right infrastructure
  • Senior management experience in the relevant markets
  • Experience of helping similar clients

3. How quickly do you want to bring AIF products to market?

Appointing an external AIFM leaves fund managers free to focus on their core skills of capital raising, deal sourcing and asset management.

If you are launching new products or want to test market appetite for a new fund, a third-party AIFM is an ideal solution. Using an external AIFM, you can test the market more quickly and at a lower cost than might otherwise have been possible.

An existing AIFM platform will have its infrastructure already up and running. This can mean a faster launch for a new fund – often in just two months – enabling you to capitalise on up-and-coming sectors.

4. What regulatory expertise and experience can the third-party AIFM offer?

A good AIFM provides cost-effective, long-term outsourcing for EU and non-EU AIFs. They should also have the expertise to advise on the best way to structure your funds and meet increasingly complex regulatory requirements.

5. What additional services can the third-party AIFM provide?

They can help with portfolio management, valuation, and regulatory reporting. An experienced third-party AIFM provider can advise clients on risk management specific to the fund they are launching.

A good AIFM should provide asset managers with:

  • A tailored, risk-based governance partner at a competitive cost
  • Independent oversight and risk management for investors
  • Monitoring and management of the changing regulatory landscape for alternative managers
  • Robust and compliant risk management that doesn’t interfere in the efficient running of your portfolio and investor services.

Talk to us

At Intertrust Group we provide a dependable partnership, flexibility to help you adapt to a fast-changing world and vast experience in family office structures.

Working with Intertrust Group, you’ll have an experienced global partner who’s committed to you for the long term.

With dedicated teams on the ground, we’re specialists in:

  • Risk management
  • Portfolio management
  • Legal and compliance
  • AIFM marketing passport
  • Valuation

We offer fully integrated fund services, covering AIFM, central administration and depositary services, either on an end-to-end or standalone basis. Our expertise spans all private capital asset classes including private equity, private debt, venture capital, real estate and infrastructure.

As an authorised Alternative Investment Fund Manager (AIFM) we can provide regulatory compliant solutions to both EU and non-EU managers. You can learn more about our services here and get in touch with one of our experts today.