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  • Extending the alternative investment fund marketing passport to non-EU countries crucial for investor choice
News & opinion

Extending the alternative investment fund marketing passport to non-EU countries crucial for investor choice

19 Jul 2016

• Today’s advice on extension to 12 non-EU countries welcomed
• But limitations placed on US fund managers could restrict EU fundraising
• National private placement regimes should remain an option

Today’s recommendation on extending the alternative investment marketing ‘passport’ to fund managers in up to 12 non-EU countries is an important step towards improving choice for investors, says Invest Europe.

The European Securities and Markets Authority (ESMA) today presented its latest recommendation to the European Commission on extending the European Alternative Investment Fund Managers Directive’s (AIFMD) passport to funds and fund managers in key jurisdictions outside of the EU. This would allow these ‘third countries’ to manage and market their funds to investors based in the EU.

As part of its country-by-country assessment, ESMA has advised that there are no significant obstacles for fund managers located in Canada and Japan. Hong Kong, Singapore and Australia have also been greenlit by the independent EU Authority, provided their equivalent regimes reciprocate to all EU Member States. The advice for Bermuda, the Cayman Islands and the Isle of Man is not yet definitive or will need more time. Last year, ESMA concluded that no obstacles exist to the extension of the passport to fund managers based in Guernsey, Jersey and Switzerland, however the passporting arrangements are not yet in place.

For fund managers in the United States, ESMA stated in today’s advice that there are no competition issues to access the AIFMD passport, as long as the funds do not involve any public offering, are not mutual funds and restrict their investment to professional investors as defined in AIFMD.

“Europe’s institutional investors, including pension funds and insurers, need access to the best funds around the world if they are to generate strong returns for the citizens who rely on them,” said Michael Collins, Public Affairs Director at Invest Europe, the trade association representing private capital. “The AIFMD passport is a potentially valuable mechanism allowing fund managers and investors across the EU to connect and invest across borders. ESMA's latest recommendations are therefore a welcome step forward.”

The passport system, currently in place for EU fund managers under AIFMD allows regulated fund managers to market to European investors without the need to apply to individual member states’ national private placement regimes (NPPRs), where they exist. The European Commission has indicated a potential phase-out of NPPRs once the passport is available to third country managers.

“The AIFMD passport will not be suitable for all non-EU fund managers, not least because of the cost and compliance burden it entails. We must therefore find other ways to ensure investor choice is protected” said Collins. “European investors must be free to choose the best asset managers, wherever they are located. A workable passport regime, sitting alongside national private placement regimes, is therefore essential.”

Last year, European institutional investors accounted for over 60% of the €47.6 billion raised by Europe’s private equity and venture capital funds, according to Invest Europe’s annual industry activity data.


Media enquiries For more information please contact

Eric Drosin Image

Eric Drosin


Communication Director


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