[Recovery and growth: the role of the alternative investment management sector]

• The alternative investment sector is ready to play a key role in supporting UK growth and innovation by providing funding to SMEs and mid-market firms to help them scale up their operations
   
• The fund management industry is well placed to be a source of new jobs, particularly if the UK can position itself as a ‘one-stop shop’ for professional investor fund management

The Alternative Investment Management Association (AIMA) and its affiliate the Alternative Credit Council (ACC) have today published a policy paper to explain the role that the UK’s world-leading alternative investment management sector can play in supporting the UK government’s goals to increase economic growth, boost productivity and level-up across the UK.

These ambitions are particularly important as the government seeks to guide the UK economy to recovery following the impact of COVID-19.

Maintaining the UK’s attractiveness for investment managers and their investors in a post-Brexit and COVID-19 landscape will support the UK’s economic prosperity. As well as providing direct employment and tax receipts, the alternative investment management industry offers investors superior risk-adjusted returns, allows investors to diversify their portfolios and contributes to the efficient functioning of capital markets.

The paper sets out five key policy objectives that form the backbone of an ambitious programme to help free up capital and create new jobs:

• Support the UK’s non-bank lending sector: Supporting the development of new forms of financing and promoting the non-bank lending sector will boost the availability of capital to SMEs and mid-market companies as they recover from the impact of COVID-19, providing a new source of growth capital for successful businesses that fall outside the risk appetite of traditional lenders. In particular, the creation of a new Long-Term Asset Fund (LTAF) will facilitate investment in illiquid assets such as infrastructure and private companies.
   
• Reform rules to grant DC schemes better access to alternatives: Exempting performance fees and profit-sharing from the existing charge cap on the default funds of defined contribution pension schemes would enable those schemes to diversify their investment exposures and access alternative investments that can support healthy retirement income for savers.
   
• Create UK professional investor funds: Introducing a series of flexible, suitably regulated and tax neutral professional investor fund vehicles would mean that the UK can position itself as a ‘one-stop shop’ for professional investor fund management and enjoy the benefits of new roles in the professional services sector.
   
• Improve the regulatory framework: A rethink of the scope and nature of rules for UK-managed funds — including rules derived from AIFMD and MiFID II — would help ensure the market’s long-term success, by ensuring that regulation achieves its aims in the most proportionate way while ensuring that regulators have the data that they need.
   
• Create an attractive tax environment: Removing elements of UK tax law that are unnecessary or burdensome while retaining those that contribute to a well-functioning tax system would ensure that the UK remains an attractive jurisdiction for investment managers to set up and expand, while also supporting investment that will be necessary for growth and innovation.

AIMA and ACC are appreciative of steps already taken by the government to boost the sector, including the ongoing reviews of the UK’s funds regime and the pensions charge cap, as well as work to establish the first UK LTAF.
 

Commenting on the policy paper, Jack Inglis, CEO at AIMA, said: “Our UK members look after the money of investors from around the world, protecting and growing the capital that is entrusted to them. As the UK eyes its future outside the EU, the government must be ambitious in cultivating this industry in a way that benefits the whole country, while also reaffirming the UK’s credentials as compelling jurisdiction for asset management firms to do business.”

ENDS

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About AIMA

The Alternative Investment Management Association (AIMA) is the global representative of the alternative investment industry, with around 2,000 corporate members in over 60 countries. AIMA’s fund manager members collectively manage more than $2 trillion in hedge fund and private credit assets.

AIMA draws upon the expertise and diversity of its membership to provide leadership in industry initiatives such as advocacy, policy and regulatory engagement, educational programmes and sound practice guides. AIMA works to raise media and public awareness of the value of the industry. AIMA set up the Alternative Credit Council (ACC) to help firms focused in the private credit and direct lending space. The ACC currently represents over 170 members that manage $400bn of private credit assets globally. 

AIMA is committed to developing skills and education standards and is a co-founder of the Chartered Alternative Investment Analyst designation (CAIA) – the first and only specialised educational standard for alternative investment specialists. AIMA is governed by its Council (Board of Directors). For further information, please visit www.aima.org

About ACC

The Alternative Credit Council (ACC) is the global body representing asset management firms in the private credit and direct lending space. It currently represents over 200 members that manage $450bn of private credit assets. The ACC is an affiliate of AIMA (the Alternative Investment Management Association). It is governed by its own board which ultimately reports to the AIMA Council. ACC members provide an important source of funding to the economy. They finance mid-market corporates, SMEs, commercial and residential real estate developments, infrastructure and the trade and receivables business. The ACC provides guidance on policy and regulatory matters, supports wider advocacy and educational efforts and produces industry research to strengthen the sector's sustainability and economic and financial benefits. Alternative credit, private debt or direct lending funds have grown substantially in recent years and are becoming a key segment of the asset management industry. The ACC seeks to explain the value of private credit by highlighting the sector's wider economic and financial stability benefits.