The UAE as the new alternative investment hub

The UAE as the new alternative investment hub

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In a globalised financial environment, managing risk has become a paramount focus for Alternative Investment Fund Managers (AIFMs). Regulatory landscapes significantly impact risk management, with rules varying across jurisdictions.

While Europe has long been recognised as a hub for AIFs, with Luxembourg as one of the top respected investment destinations, the UAE has emerged as a strong contender. In recent years, it is attracting increasing attention from investors worldwide with its tax-friendly policies and favourable business environment.

As the UAE makes its mark in the AIF industry, it would help to understand the country’s risk management frameworks as well as forecast the future trends.

Regulatory landscapes: The UAE and EU

The risk management requirements for both UAE and EU markets aim to hold strong management norms and require enhanced transparency with extensive reporting guidelines.

The UAE has empowered the Securities and Commodities Authority (SCA) to oversee risk management in the field of AIF. It introduced substantial regulatory changes in 2022, including enhanced risk management protocols and stricter reporting norms.

Meanwhile, in the EU, the regulatory environment for alternative investment funds is governed by the Alternative Investment Fund Managers Directive (AIFMD). Under the AIFMD, the EU expanded risk management requirements with AIFMD II in