The EU’s revised Alternative Investment Fund Managers Directive (AIFMD II) will come into force this month, introducing changes to risk retention, leverage caps and liquidity limits for funds.
The updated framework, which follows the original AIFMD, is set to come into effect from 16 April 2026, with its most significant impact expected to fall on loan-originating investment funds.
Speaking to partners Mikhaelle Schiappacasse and Katie Carter at law firm Dechert, the key areas of change for fund managers include new rules on risk retention, liquidity risk management, leverage limits and concentration limits.
Schiappacasse told Alternative Credit Investor (ACI) that the most impactful rule changes will be “the leverage cap and the risk retention requirement”, explaining that “it’s not something managers had to do before”.
Carter explained that the reforms are aimed at improving transparency, mitigating systemic risk and enhancing investor protection.
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“This [AIFMD II] comes out of the shadow banking review that the European regulators did quite a number of years ago now, where they were expressing concern about the amount of lending activity that was going on in the non-banking space,” she said.
Both Carter and Schiappacasse stated that the new rules are likely to have a limited impact on closed-ended funds, but a greater effect on open-ended vehicles, which will need to revisit their liquidity management tools.
They added that, to some extent, the regulation may begin to influence whether funds are structured as open-ended or closed-ended.
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However, Schiappacasse does not think the new rules will curb the growth of evergreen vehicles. “They’ll just be more sensitive to how they structure [their funds], and the redemption terms and the subscription terms,” she said.
