Investors Demand Regulation-Specific Products, Says Northern Trust

Investors in funds are increasingly demanding products that are compliant-specific with incoming regulatory requirements, according to a survey from Northern Trust.

The survey of fund managers and consultants found 28% of respondents believed investors are demanding products that combine traditional offshore and fully regulated products.

“This is a gradual, incremental change in investor behaviour and will have a significant impact on the evolution of fund managers’ product offerings- regulation is here to stay, but this is a marathon, not a sprint,” says Ian Headon, head of depositary regulatory and technical services, Northern Trust.

Investors are expected to face another busy year, in which a number of new regulatory requirements in Europe and the U.S. are set to become implemented Annex IV reporting under the Alternative Investment Fund Management Directive (AIFMD), TARGET2 Securities (T2S), and the Volcker Rule.

However, the majority of survey respondents (65%) believed their investors viewed the AIFMD as primarily a compliance exercise, despite the fact implementation is almost complete.

“The successful managers will be the ones that break away from the pack and get ahead of the regulatory trends,” adds Robert Angel, head of regulatory services for Europe, Middle East and Africa, Northern Trust.