Introduction to Alternative Investment Funds (‘AIFs’)

An alternative investment fund (AIF) is type of collective investing 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.

AIFs are authorised 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 24-hour 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.