EFAMA and AMIC launch joint report on fund leverage in Europe

The European Fund and Asset Management Association (EFAMA) and Asset Management and Investors Council (AMIC) have published a joint report, analysing the use of leverage in investment funds in Europe.

The paper was published on the 19 July. It analyses how and why leverage is used in investment funds in Europe, how firms address in practice-related risks and the technical tools used to measure leverage and improve the management of their portfolio.

The report also addresses international regulatory concern about systemic risk in investment funds.

The European legislative regime, notably the UCITS and AIFMD legislative frameworks, and other rules already offers a robust framework to address leverage risks, EFAMA claimed in their statement announcing the report.

EFAMA said that in recent years the EU regulatory framework has been “sound and efficient” as it allows European regulators to assess levels of leverage in funds and take appropriate supervisory actions.

Furthermore, levels of leverage have remained constant and there has been no systemic risk related to the use of leverage in EU-domiciled funds, EFAMA said.

Basis for investment

Peter de Proft, EFAMA director general, said he considers EU regulation to be “cutting-edge framework at a global level” and hopes that IOSCO and FSB regulators use it as a benchmark for their work.

“This will allow them to deliver their mandate and propose a consistent matrix of different measures that can capture the broad universe of fund vehicles and investment strategies,” de Proft said. 

ABOUT THE AUTHOR
Gary Robinson
Deputy Editor, International Investment and Head of Video at Open Door Media Publishing. A fully qualified journalist and filmmaker with more than 20 years' financial services experience, both as journalist and originally as an IFA.

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