Fund placement in the EU: trends, challenges and success factors

Europe’s market for alternative investments is growing – but access remains complex

Alternative investment funds (AIFs) have been experiencing strong growth in Europe for several years. According to Preqin (2023), alternative funds in the EU now manage over €8 trillion, with an annual growth of 14%. Private equity, venture capital, hedge funds, private debt and real estate funds are particularly popular, serving as alternative sources of returns in a volatile market environment.

Institutional investors – including pension funds, insurance companies, family offices and endowments – are increasingly looking for diversified investment opportunities in order to become less dependent on the fluctuations of traditional capital markets. This is leading to an increased allocation to alternative funds.

Particularly dynamic developments in the alternative fund business in Europe

There are clear growth segments within the alternative investment sector in Europe.

Private equity & venture capital: In Europe, the allocation of institutional investors to private equity is steadily increasing. Large European pension funds invest an average of 10-15% of their portfolio in private equity, with venture capital funds raising over EUR 80 billion in new funds each year (IPE, 2023; Invest Europe, 2023).

Hedge funds: According to EFAMA (2023), interest in alternative UCITS funds* is growing at annual growth rates of 10%. The market is increasingly dominated by market-neutral strategies and systematic macro funds.

Real estate & infrastructure: Institutional investors are increasingly focusing on core and core+ property strategies as well as infrastructure financing. The proportion of alternative assets in the portfolios of European insurers and pension funds now stands at 20-25% (BaFin, 2023; European Investment Fund, 2023).

These figures show the enormous potential for investment managers who want to sell alternative funds in Europe. However, regulatory hurdles, national peculiarities and high distribution costs make market entry challenging.

Opportunities and challenges in EU fund placement

Fund distribution in Europe offers significant market opportunities but also poses regulatory and operational challenges.

Opportunities for alternative investments in the EU

The European market for alternative investments offers investment managers many advantages, in particular through harmonised regulations and increasing investor demand.

EU-wide fundraising through passporting: AIFMD authorisation enables marketing in 27 member states, allowing fund providers to operate across borders (ESMA, 2023).

High demand for alternative strategies: European institutional investors are increasingly diversifying their portfolios and are interested in alternative investments.

Growing interest in ESG: EU regulatory requirements (SFDR, EU taxonomy) are increasing the demand for sustainable investment strategies.

Challenges of fund placement in Europe

Despite the aforementioned opportunities, there are still considerable hurdles for asset managers wishing to market their funds in Europe.

Regulatory fragmentation: Despite the AIFMD, there are country-specific regulations that make distribution more difficult (e.g. additional ESG reporting obligations in several countries).

Investor preferences vary widely: while some markets favour illiquid infrastructure projects, others prefer liquid hedge fund strategies.

High sales costs: Local adjustments to compliance requirements and marketing strategies can increase sales costs by up to 30 % (Deloitte, 2023).

To be successful in Europe, asset managers need to develop a well-thought-out placement strategy that combines regulatory compliance, market understanding and investor expectations.

Regulatory requirements for fund placement in the EU

The marketing of alternative funds in the EU is governed by various regulatory frameworks. Asset managers must familiarise themselves with the most important regulations in order to ensure a successful market entry.

AIFMD (Alternative Investment Fund Managers Directive)

• • Authorises the cross-border distribution of alternative funds within the EU.
  • Necessary for private equity, hedge funds, real estate and infrastructure strategies.
  • Requires a licence in an EU country (e.g. Luxembourg, Ireland, Germany).

MiFID II & UCITS

• • MiFID II: Strict disclosure requirements for fund providers and placement agents.
  • UCITS vs. AIFMD: While UCITS products are primarily used for liquid, regulated mutual funds, the AIFMD focuses on alternative investments for institutional investors.

Country-specific regulatory peculiarities

In addition to the EU-wide regulations, there are special regulations for the sale of alternative funds in individual countries.

• • Additional reporting obligations for alternative funds in some markets (e.g. tax reporting obligations in Italy and France).
  • ESG regulations: Increasing transparency requirements for sustainable funds across the EU (SFDR, EU taxonomy).
  • Investor-specific restrictions: Some markets have specific minimum allocation or risk reporting requirements for alternative funds.

Effective fund placement therefore requires not only an AIFMD-compliant structure, but also customisation to local regulations and investor preferences.

Strategies for fund distribution in Europe

Asset managers can either sell their funds directly to institutional investors or work with a placement agent. Both strategies have advantages and disadvantages.

Direct sales to institutional investors

• • Asset managers approach pension funds, insurance companies and banks directly.
  • Advantage: Direct control over distribution.
  • Disadvantage: time-consuming, regulatory hurdles, no local presence.

Cooperation with placement agents

A specialised placement agent not only handles sales, but also provides regulatory and operational support.

• • Regulatory support (AIFMD authorisation, MiFID II requirements).
  • Identification of suitable investors based on investment preferences.
  • Adaptation of the sales strategy to local compliance requirements.
  • Roadshow organisation and investor meetings in key markets.

The key to successful fund placement in Europe lies in the combination of sound market analysis, regulatory compliance and local network access.

The bottom line: Successful fund placement in Europe requires a targeted strategy

Alternative investments are growing in the EU, but regulatory hurdles and national differences require a structured distribution approach. Asset managers wishing to place their funds in Europe must adapt to local investor expectations, regulatory requirements and distribution structures.

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