ESMA Report Highlights Liquidity Concerns For Alternative Investment Funds

8 Apr 2021 01:51 PM

The European Securities and Markets Authority (ESMA), the EU securities regulator, today publishes its third annual statistical report on the Alternative Investment Fund (AIF) sector. The report has found that the sector increased by 15% in 2019 to EUR 6.8trn in net assets from EUR 5.9trn in 2018.

The main risks faced by the sector relate to a mismatch between the potential liquidity of the assets, and the redemption timeframe offered to investors. This is particularly the case for real estate funds and funds of funds. For hedge funds, the issue of leverage is key at more than 900%, in a sector valued at EUR 354bn in net asset value (NAV), including EUR 269bn for hedge funds with UK AIFMs.

The AIF sector was heavily impacted by the COVID-19 related market stress during the first quarter of 2020, and while outside the reporting period, a snapshot of the main event is included in the report.  

Main findings:

ESMA will continue to report annually on its analysis.

Related Documents

EU Alternative Investment Funds - 2021 Statistical Report

ESMA50-165-1734 ASR AIF 2021.PDF (1.77 MB)