Three months after AIFMD II came into effect, how are fund managers adapting?

Authored by: Andrea Lennon, Head of Client Service, Ireland
Published on: July 14, 2026

The post-deadline environment is proving more nuanced than the implementation timeline suggested. While many firms met the 16 April deadline through governance reviews, documentation updates and board approvals, the first month under AIFMD II has reinforced that compliance remains a moving target.

With key Level 2 standards and expanded reporting obligations deferred until 2027, managers are operating under a revised framework while still lacking full clarity on how parts of the regime will ultimately be supervised.

Immediate requirements around governance, liquidity tools and loan origination are already reshaping fund manager priorities. For COOs, compliance teams and risk functions, the result is less a completed implementation exercise than the start of a longer transition.

Governance reviews move from policy to practice

For managers of open-ended funds, liquidity management has become one of the first tests of AIFMD II.

While documenting liquidity management tools has been relatively straightforward, the greater challenge is operationalising them effectively during periods of market stress. That scrutiny is likely to intensify as ESMA and national regulators continue shaping expectations around liquidity governance and supervisory convergence across Member States.

Delegation oversight has also re-emerged as one of the most politically sensitive areas of the revised regime, particularly for firms operating cross-border structures involving non-EU delegates.

While the delegation model remains intact, the first month under the new regime has already prompted managers to revisit oversight frameworks, reporting lines and substance arrangements. For many UK-linked firms, the renewed focus on third-country delegation has reinforced concerns that supervisory expectations may continue tightening over time.

Private credit faces the sharpest adjustment

If one segment of the alternatives industry is feeling the immediate impact of AIFMD II most acutely, it is private credit.

The directive introduces the first harmonised European framework for loan-originating funds, bringing new expectations around leverage, diversification, risk retention and credit risk management into a market that has historically evolved unevenly across jurisdictions.

The objective is clear: reducing opportunities for regulatory arbitrage between fund domiciles while creating a more consistent supervisory framework across the EU.

Direct lenders are now reassessing whether existing leverage frameworks, underwriting governance and portfolio monitoring processes remain fit for purpose.

For larger institutional platforms, the framework largely formalises standards already in place. For others – particularly firms scaling rapidly within private credit – it is exposing areas where operational infrastructure may not yet have kept pace with growth.

The timing is significant given the continued expansion of semi-liquid and hybrid private market structures across Europe. Combined with ELTIF II, AIFMD II is accelerating the retailisation of private markets, increasing the importance of liquidity governance, transparency and resilience across the alternatives ecosystem.

The long tail of Level 2

Despite the implementation deadline having passed, much of the industry’s attention is already shifting towards 2027.

Several of the most intensive elements of AIFMD II – including expanded Annex IV reporting obligations and certain Level 2 technical standards – remain deferred, leaving firms complying with a revised framework while still lacking clarity on how some obligations will ultimately be supervised.

The delay has provided short-term breathing room, but also created “compliance deficit” – a growing backlog of reporting, systems and data work as firms prepare for the next phase of implementation.

The challenge is compounded by the fact that implementation is not unfolding uniformly across Europe. While the revised framework is intended to increase harmonisation, managers are still navigating differences in regulatory interpretation and supervisory tone across jurisdictions across Europe.

Operational readiness becomes the differentiator

One quarter under AIFMD II, the firms adapting most comfortably are not necessarily those with the largest compliance functions, but those that treated the directive as an operational restructuring exercise well before the April deadline arrived.

Across the industry, managers are confronting a more demanding supervisory environment requiring stronger reporting frameworks, more demonstrable governance oversight and greater operational transparency across cross-border structures.

For larger institutional platforms, many of those capabilities were already embedded. For smaller or rapidly scaling managers, however, AIFMD II is exposing the strain created by increasingly complex European reporting and distribution requirements.

As deferred Level 2 standards and expanded Annex IV reporting obligations move closer into view, that pressure is unlikely to ease.

More broadly, the first month under AIFMD II has reinforced a shift already underway across European alternatives: regulators are focusing less on whether governance frameworks exist on paper and more on whether firms can demonstrate those frameworks operating effectively in practice.

Over time, that distinction may prove commercially significant, widening the divide between managers equipped for a more intensive supervisory environment and those still operating with infrastructure built for a less complex era.