The historic DNA of a hedge fund has been that out-performance through the generation of absolute alpha justifies the 2/20 fee model and for the most part, the traditional fee model prevailed. But look a little closer and it becomes clear that the industry has evolved considerably from this single dimensional moniker, and hedge fund managers are creating new products and fee structures as the competition for investors intensifies.

Welcome to the autumn/fall edition of Citco Industry Spotlight in which we cover the usual topical matters facing our industry.

Despite the industry’s best efforts to get back to business by providing returns on investment, we still haven’t been able to shake off the “what happens next” scenario in the regulatory and tax space. Most recently, AIFMD and FATCA have gone live, and we highlight both in this publication.

After several years of preparation, from 22 July 2014 any alternative manager marketing into the European Economic Area (EEA) needs to comply with EEA member state approval/notification requirements under the AIFMD and, in the case of an EEA manager, also be authorized by it’s home state regulator as an AIFM. Citco has implemented its service offerings designed to help clients to comply with the directive, as previously communicated in various client forums and updates.

Guidance still being updated

The 1 July 2014 effective date for the implementation of FATCA has passed and Citco has been busy implementing our compliance solution.

All new investor subscriptions as of 1 July must be accompanied by a completed IRS tax form or self-certification statement with the appropriate FATCA representations. Most funds have now registered with the IRS, with Citco’s assistance where appropriate.