CEO blog: June 2019 notes

By Jack Inglis, CEO

Published: 27 June 2019


The recent news coverage of Woodford Investment Management has directed attention to fund liquidity risk and asked whether alternative UCITS are appropriate for all investment strategies. I have received several media enquiries on this subject as it relates to hedge funds. Things to note are that alternative UCITS tend to be used for the most liquid strategies such as equity long/short and global macro, and that investors tend to be sophisticated institutions, rather than retail, who are much better equipped to assess liquidity risk. Nevertheless, we should expect regulators to be looking very closely at this issue and I look forward to those discussions as our industry has a lot to offer as best of breed in risk management.

Despite the US-China trade tensions the China financial markets continue to open up to foreign business. We heard as much during our China Asset Management Forums in Frankfurt and London during June. Loosened restrictions on foreign ownership and ongoing financial liberalisation are giving greater access for foreign investment firms to both mainland China markets and investors. QFII quotas have been expanded and this month the CSRC announced a scheme that permits local mutual funds to lend out securities. This should greatly expand the opportunities to pursue long/short strategies in China. At our forums I was pleased to be joined by AMAC who grant licences for private funds. We have forged a strong relationship with the team through our office in Shanghai and they are keen to see more foreign firms established in China.

We were pleased to be granted affiliate membership of IOSCO this month. The arrangement provides AIMA with increased visibility of and participation in its agenda and allows us to improve further the advocacy and representation services we deliver to members. We have worked closely with IOSCO already on its assessment of leverage in investment funds and look forward to strengthening links with its members, who regulate over 95% of the world’s securities markets.

This month we participated in an FCA roundtable on Women in Finance, at which the regulator shared its perspective on how a lack of diversity in firms can lead to poor risk management. AIMA has an active D&I working group and we are preparing a paper that will be helpful for our members as they address this important issue within their own firm. It will be ready by the end of summer.