Alternative Investment Fund Managers Directive (AIFMD)

A law passed by the EU in 2011 that deals with the regulation of hedge funds and private equity, along with other investment vehicles deemed "alternative” to traditional types of funds. The provisions required registration of firms seeking to provide these kinds of investment services. The legislation also set up a series of disclosure requirements.

Hedge funds and private equity (and other types of similar things) are pools of money that operate with fewer restrictions than typical mutual funds. The goal of these types of companies is to give their managers more leeway to make profits. Traditionally the haven of wealthy investors, in the 2000s, word of hedge funds and private equity had trickled down to regular retail investors, who wanted the chance for additional profits that these places provided.

As they became more popular, with a wider segment of the investing population getting involved, there was a push for more oversight and regulation. The AIFMD is part of this movement, creating guidelines to police the industry across most of Europe.