The consulting firm found 85 per cent of managers have not started compliance or implementation programmes to meet the incoming Alternative Investment Fund Managers Directive (AIFMD).
PwC believes it will take up to 12 months to implement major projects, leaving most of these managers unable to meet the deadline.
As a result, investors will face a sudden shortfall in places to put their money – a particularly damaging result at a time when other markets are offering poor returns, driving investors into alternatives, PwC warned.
“It is ironic that European rules which aimed to protect investors are likely to end up limiting the choice of those investors,” said PwC’s Rob Mellor. “Against a low return environment, institutional investors, including the pension funds for Europe’s workers, will be looking to access global markets and the best managers – implementing AIFMD in time is therefore potentially a significant barrier.”