Release date
24 January 2023
Author
By Sergei Grechkin, UFG Capital Investment Management, Risk Manager
Category
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Alternative Investment Fund (AIF) Industry – Forecast for 2023

Alternative Investment Fund (AIF) Industry – Forecast for 2023

Niels Bohr said (quote) “Prediction is very difficult, especially if it’s about the future!”.

Last year has been one for the book, but at the beginning of 2023 I would like to share some of my prediction for some potential trends that the AIF and Alternative Investment Fund Management (AIFM) industry may experience in 2023:

  1. Continued growth: The AIF industry has been growing in recent years and this trend is expected to continue in 2023. The growth is driven by an increasing demand for alternative investment products, such as private equity, real estate, and infrastructure, among others.
  2. Regulatory scrutiny: The AIFM industry is subject to regulatory oversight, and this is expected to continue in 2023. The EU's AIFMD regulations set forth requirements for risk management, reporting, and transparency, among others. AIFM will have to comply with these regulations and adapt to any changes that may be introduced in the future.
  3. Increased competition: As the AIFM industry continues to grow, competition among fund managers is likely to increase. In order to remain competitive, AIFM will have to focus on providing high-quality products and services, as well as delivering consistent returns to investors.
  4. ESG integration: Despite problems with energy supply, in EU Environmental, Social and Governance (ESG) factors are still increasingly important to investors, and many are incorporating ESG considerations into their investment decisions. In 2023, it is expected that more AIFM will integrate ESG considerations into their investment strategies and products, as it will help them to attract and retain investors who are looking for sustainable and responsible investment options.
  5. Increased use of technology for investment decisions: The use of technology and big data analytics will continue to grow in the AIFM industry in 2023, as it allows for more efficient and accurate investment decisions. AIFM will increasingly use tools such as machine learning and artificial intelligence to analyze large amounts of data and identify potential investment opportunities.
  6. Increased focus on cybersecurity: As the use of technology increases in the AIFM industry, so will the focus on cybersecurity. In 2023, it is expected that more AIFM will invest in cybersecurity measures to protect their systems and data from cyberattacks.
  7. Greater interest in real assets: Real assets such as real estate, infrastructure, and commodities are expected to continue to attract investor interest in 2023. AIFM will increasingly focus on these asset classes to meet the demands of investors who are looking for stable, long-term investments.
  8. More opportunities for cross-border investments: With the EU's Capital Markets Union initiative, it is expected that there will be more opportunities for cross-border investments in 2023. This could increase the competition among AIFM and make it easier for investors to access alternative investment products in different countries.

In summary, the AIFM industry in the EU is expected to continue to grow in 2023, but it will also face challenges such as regulatory scrutiny, increased competition and the need to adapt to digitalization. AIFM will have to stay informed and adapt to changing market conditions in order to remain competitive, provide stable returns for investors and meet their demands for sustainable, responsible and innovative investment options.

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