Date: 29th January 2021

The European Commission (EC) launched two separate public consultations on the review of the regulatory framework for alternative investment funds (AIFs) and European long-term investment funds (ELTIFs). However, since ELTIFs are a sub-set of AIFs, for reasons of simplicity, BETTER FINANCE decided to gather input from its members in a joint document.

The very name of AIFs should be changed, as it is very misleading and does not comply with MiFID rules: it is unclear how hese are “alternative”. Many nonprofessional investors understand alternative investment management as hedge funds. However, the reality is much different as AIFs include a lot of retail long-only funds. This labeling does not comply with MiFID which requires
investor information to be clear and intelligible. The vast majority of EU individual “alternative investment fund” investors don't even know the AIF acronym, and don’t understand they have invested in AIFs instead of UCITS, and what it means in terms of investor protection.

The rules on marketing of Alternative Investment Funds (AIFs) to individual, non-professional investors do not require improvement, but reform. Currently, there is no pan-EU market for “retail” AIFs due to the different national rules on the distribution of local and cross-border AIFs. Moreover, due to the uneven rules on direct vs indirect (packaged) distribution of AIFs in EU Member States, many individual investors gained exposure to AIFs indirectly, while investing in plain vanilla securities has become very difficult.