An alternative investment fund (AIF) is type of collective investment where funds are raised from a number of investors with a view to investing them in accordance with a defined investment policy.
AIFs established in Ireland are authorised under the following pieces of domestic investment fund legislation:
- Unit trusts under the Unit Trusts Act 1990
- Investment limited partnerships under the Investment Limited Partnerships Act 1994
- Common Contractual Funds under the Investment Funds, Companies and Miscellaneous Provisions Act 2005
- ICAVs under the Irish Collective Asset-management Vehicles Act 2015
- Investment Companies under the Companies Act 2014.
The Central Bank is responsible for the authorisation and supervision of unit trusts, common contractual funds, investment companies and investment limited partnerships and has the power to impose conditions on them.
The conditions that the Central Bank imposes are contained in the AIF Rulebook which supersede all requirements set out in previous Non-UCITS Notices. Each chapter must be read in conjunction with all other requirements set out in the AIF Rulebook. Each chapter must also be read in conjunction with the relevant investment fund legislation, the IIA (in relation to chapter 5 - Fund Administrator Requirements), AIFMD Level 2 and the AIFM Regulations.
AIFs authorised solely under the above legislation can be in one of two categories:
- A Retail Investor AIF (“RIAIF”) is an AIF authorised by the Central Bank which may be marketed to retail investors.
- A Qualifying Investor AIF (“QIAIF”) is an AIF authorised by the Central Bank which may be marketed to Qualifying Investors.
Both categories are subject to the AIFM Regulations, the AIFMD Level 2 Regulation and the Central Bank’s AIF Rulebook.
RIAIFs are subject to less investment and eligible asset restrictions than UCITS but are subject to a regime more restrictive than the QIAIF Regime. RIAIFs do not have the automatic right to market across the EU under the AIFMD marketing passport. Access to individual markets may be granted on a case-by-case basis. RIAIFs must appoint a fully authorised AIFM. Non-EU managers or registered AIFMs are prevented from managing RIAIFs. Chapter 1 of the AIF Rulebook set out the Central Bank’s detailed regulatory requirements for RIAIFs.
QIAIFs are not subject to many investment or borrowing restrictions. QIAIFs can avail of the Central Bank’s approval process subject to certain conditions and confirmations. In addition, QIAIFs may be marketed freely to professional investors across the EU and the EEA by an authorised AIFM using the AIFMD marketing passport. The Central Bank’s regulatory requirements in relation to QIAIFs are set out in Chapter 2 of the AIF Rulebook.
RIAIFs and QIAIFs may be established as open-ended, closed-ended or open-ended with limited liquidity.
AIFs may be authorised under domestic investment fund legislation (as noted above) and also under certain product specific legislation. This product specific legislation includes the:
- European Long Term Investment Fund (ELTIF) Regulation (EU 2015/760); and
- Money Market Fund (MMF) Regulation (EU 2017/1131).
ELTIFs are AIFs that invest in long-term investments in the real economy. The ELTIF Regulation sets out requirements pertaining to the investment policies, the scope of eligible assets, diversification requirements and general operating conditions for these funds. The Central Bank’s regulatory requirements in relation to ELTIFs are set out in Chapter 6 of the AIF Rulebook.
ELTIFs may be established as closed-ended or open-ended with limited liquidity.
MMFs may be established as AIFs and invest in a range of asset types including money market instruments, deposits with credit institutions or cash.
Under the MMF Regulation, MMFs may be established as a:
- Variable Net Asset Value (VNAV) MMF;
- Public debt Constant Net Asset Value (CNAV) MMF; or
- Low Volatility Net Asset Value (LVNAV) MMF.
An MMF AIF may be established as either a RIAIF (and marketed to Retail investors) or a QIAIF (and marketed to Qualifying Investors) under the AIF Rulebook.
