International Funds Focus Quarterly | April 2026
Published on 16th April 2026
Fundraising, fund marketing and ESG developments dominate a busy agenda for fund managers across Europe
At a glance
As the EU's AIFMD II reforms come into force, Osborne Clarke's new technical guide covers the fragmented private placement regimes across the EEA and UK.
Sustainability reforms continue to set the agenda for fund managers across the UK and Europe, including for labelling, communications and disclosures.
Broader developments on non-financial misconduct and AI remain relevant for fund managers and financial services firms.
Welcome to this spring edition of our quarterly International Funds Focus.
The Alternative Investment Fund Managers Directive II (AIFMD II) comes into force across the EU on 16 April, creating further divergence between the EU and UK regimes with which fund managers are having increasingly to contend.
A new technical guide on fundraising in the EU and the UK, available via Osborne Clarke's Fund Marketing Platform, offers timely and full coverage of the current framework, including the changes brought by AIFMD II.
Capital raising also features in this edition, which looks at the use of side letters and three common terms: most-favoured nations, co-investment rights and personalised reporting. How can emerging fund managers deploy these terms without inadvertently compromising their fund?
In the meantime, there have been three notable recent developments in environmental, social and governance (ESG) matters across Europe.
In the UK, a review by the Financial Conduct Authority (FCA) of good and poor practice in product labelling indicates that the regulator is moving into active supervision of how sustainability labels are used in practice.
In the EU, the European Securities and Markets Authority (ESMA) has published a second thematic note on best practices for communicating ESG strategies in a clear, fair and non-misleading manner. The European Commission has also published a wide-ranging proposal to overhaul the Sustainable Finance Disclosure Regulation (SFDR), moving away from a disclosure-based system to a product categorisation system.
There have also been a range of broader developments relevant to all financial services firms, including fund managers, covering non-financial misconduct and artificial intelligence (AI).
Fundraising in Europe and the arrival of AIMFD II
Fund managers seeking to raise capital from professional investors across Europe face an increasingly complex regulatory landscape. The UK's departure from the EU, combined with subsequent legislative changes, has created substantial and growing bifurcation between the two regimes: differences that will widen with AIFMD II taking effect from the 16 April.
Osborne Clarke's updated technical guide outlines the current framework for marketing alternative investment funds throughout the UK and European Economic Area, explaining concepts such as reverse solicitation, pre-marketing and marketing. The guide also looks at different national private placement and sustainability regimes, distribution considerations, and the implications of AIFMD II.
Read our technical guide to fund raising >
Sign-up for complementary access to our fund marketing platform >
Side letters and approaches for UK emerging fund managers
Given the broad scope of side letter terms and the number of investor requests that managers receive, a robust side letter process during the fundraise is important to ensure that the implications have been considered before any terms are accepted. When agreeing terms, managers will want to ensure consistency across the scope of individual provisions in the side letters and their existing limited partnership base.
Good and poor practice for UK funds using sustainability labels
The FCA has identified good and poor practice in how UK fund managers apply sustainability labels under the SDR regime. Fund managers using sustainability labels must demonstrate that their portfolio construction, monitoring and documentation tell a coherent, consistent story. A gap analysis against the FCA's expectations may be valuable, whether a label has already been adopted or is still under consideration.
The EU's SFDR reforms and implications for asset managers
The proposed amendments to the SFDR follow long-standing and widely acknowledged issues with the existing framework, including that it produces disclosures that are too long and complex, making it difficult for investors to understand and compare the environmental or social characteristics of financial products. The framework has also effectively been used as a labelling system, causing confusion and an increased risk of greenwashing.
ESMA guidance on ESG strategies
The cornerstone of ESMA's approach is that every sustainability-related claim is based on four key principles: accuracy, accessibility, substantiation and being up to date. In its second thematic note on sustainability claims, ESMA looks to clarify how these principles should be applied when reporting on how ESG factors or exclusion criteria are respectively integrated or applied in investment policies.
Broader developments in Europe's financial sector
There have been broader developments in the financial sector that have also been relevant to fund managers. These include recent developments on non-financial misconduct in the UK, where the FCA have finalised the rules that will apply, and a recommendation from the European Parliament on rules and supervisory coordination in relation to AI.
