Fund placement EU: Alternative investment funds (AIFs) have been experiencing strong growth in Europe for several years. According to Preqin (2023), alternative funds in the EU now manage over €8 trillion, with an annual growth of 14%. Private equity, venture capital, hedge funds, private debt and real estate funds are particularly popular, serving as alternative sources of returns in a volatile market environment.
Institutional investors – including pension funds, insurance companies, family offices and endowments – are increasingly looking for diversified investment opportunities in order to become less dependent on the fluctuations of traditional capital markets. This is leading to an increased allocation to alternative funds.
Particularly dynamic developments in the alternative fund business in Europe
There are clear growth segments within the alternative investment sector in Europe.
Private equity & venture capital: In Europe, the allocation of institutional investors to private equity is steadily increasing. Large European pension funds invest an average of 10-15% of their portfolio in private equity, with venture capital funds raising over EUR 80 billion in new funds each year (IPE, 2023; Invest Europe, 2023).
Hedge funds: According to EFAMA (2023), interest in alternative UCITS funds* is growing at annual growth rates of 10%. The market is increasingly dominated by market-neutral strategies and systematic macro funds.
Real estate & infrastructure: Institutional investors are increasingly focusing on core and core+ property strategies as well as infrastructure financing. The proportion of alternative assets in the portfolios of European insurers and pension funds now stands at 20-25% (BaFin, 2023; European Investment Fund, 2023).
These figures show the enormous potential for investment managers who want to sell alternative funds in Europe. However, regulatory hurdles, national peculiarities and high distribution costs make market entry challenging.
Opportunities and challenges in EU fund placement
Fund distribution in Europe offers significant market opportunities but also poses regulatory and operational challenges.
Opportunities for alternative investments in the EU
The European market for alternative investments offers investment managers many advantages, in particular through harmonised regulations and increasing investor demand.
EU-wide fundraising through passporting: AIFMD authorisation enables marketing in 27 member states, allowing fund providers to operate across borders (ESMA, 2023).
High demand for alternative strategies: European institutional investors are increasingly diversifying their portfolios and are interested in alternative investments.
Growing interest in ESG: EU regulatory requirements (SFDR, EU taxonomy) are increasing the demand for sustainable investment strategies.
Challenges of fund placement in Europe
Despite the aforementioned opportunities, there are still considerable hurdles for asset managers wishing to market their funds in Europe.
Regulatory fragmentation: Despite the AIFMD, there are country-specific regulations that make distribution more difficult (e.g. additional ESG reporting obligations in several countries).
Investor preferences vary widely: while some markets favour illiquid infrastructure projects, others prefer liquid hedge fund strategies.
High sales costs: Local adjustments to compliance requirements and marketing strategies can increase sales costs by up to 30 % (Deloitte, 2023).
To be successful in Europe, asset managers need to develop a well-thought-out placement strategy that combines regulatory compliance, market understanding and investor expectations.
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