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Understanding Investing 简体中文网页 Members section

- ALFI statements

On 23 September 2015, ALFI responded to the International Organization of Securities Commissions (IOSCO) consultation report on Elements of International Regulatory Standards on Fees and Expenses of Investment Funds, which proposes an updated set of common international standards of best practice for the operators of Collective Investment Schemes(CIS) and regulators.

Download the document here.

Updated on 24/09/15
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- Press releases

Pension funds around the world are increasingly looking beyond their borders to address their investment needs, according to the Association of the Luxembourg Fund Industry (ALFI) which today released its global pension fund report, “Beyond their borders: evolution of foreign investment by pension funds,” produced by PwC Luxembourg.

The report - which looks at the growth of pension funds globally, the asset allocation of pension funds on a regional basis and the foreign investment of pension funds - found that South America’s pension funds showed the highest growth rate globally, with assets soaring from USD 184 billion (bn) in 2008 to USD 528 bn in 2014, a 19.2% compound annual growth rate (CAGR).

In terms of investing overseas, foreign investment for the pension funds of the majority of OECD countries (excluding the US) accounted for about 25% on average of their total pension investments in 2008, but jumped to almost 31% in 2014.   

Denise Voss, Chairman of ALFI, comments: “As the baby boomer generation approaches retirement and life expectancy continues to improve, public sector pension liabilities will grow. At the same time the need for greater personal savings for retirement income is growing. This study provides more clarity on the global investments of pension funds, demonstrating the opportunities offered by global investing and how some markets are approaching this, but also highlighting how pension fund regulations differ from one country to the other. In particular it highlights the regulatory constraints on some pension funds in the amount they can allocate to investment funds or in foreign investments and suggests the impact this could have on their growth.”

Dariush Yazdani, Partner of PwC Luxembourg Market Research Centre, adds: “The new millennium has changed the playing field for pension funds. There are significantly more people retiring today than there were even a decade ago and this is putting pressure on pension funds' investment strategies. But even in the midst of new challenges, pension fund managers are facing a future brimming with opportunities. The unique ability of pension funds to focus on long-term investments allows them to absorb short-term volatility while bearing market and liquidity risk through diversification - one of the most effective means of achieving diversification is through foreign exposure.”

Key findings of the report include:

  • On a regional basis, North America’s pension funds represented the largest assets at a global level, having reached USD 27.21 trillion (tr) in 2014, up from USD 15.8 tr in 2008. 
  • Taken globally pension funds allocated 44% of their total portfolio to equities, 28% to bonds, 26% to alternatives and 2% to money market products in 2014. Allocation varies considerably from region to region, with North America allocating 48% of total assets to equities, Asia Pacific 40%, Europe 37%, and South America 34%.
  • The US, Canada, Japan and the Netherlands are the countries that pursued the largest equity investments in 2014, allocating USD 12 tr, USD 986 bn, USD 662 bn and USD 582 bn respectively to this asset class.
  • Japanese pension funds experienced the largest increase in the share of equities within their total portfolio, which increased by 21% from 2008 to 2014. In contrast, South Korea’s pension funds showed the largest decline in their equity share, decreasing by 22% from 2008 to 2014.
  • The alternative asset class has shown a strong increase from 2008 to 2014 with the total amount allocated to alternatives jumping from USD 4.4 tr in 2008 to USD 9.7 tr in 2014, a 117% increase. 
  • Foreign investment by the pension funds of the majority of OECD countries (excluding the US) accounted for about 31% of their total pension investments on average, however with regional differences described below.
  • In North America[1], pension funds’ overseas investments stood at 16% of the region’s total portfolio in 2008, reaching 21% in 2014.
  • In Europe, the average percentage of pension fund portfolios allocated to foreign markets increased from 32% in 2008 to 34% in 2014, with the Netherlands, Finland and Portugal investing the highest percentage of their pension fund portfolios overseas in the last six years – in the Netherlands foreign investment reached 76% of the country’s total portfolio in 2014.
  • Asia Pacific’s pension funds invested, on average, 19% of the region’s total portfolio in foreign markets in 2008, and expanded that to 31% in 2014. Hong Kong and Japan are the most aggressive investors in foreign investments within Asia, with Japan’s pension fund allocation to foreign markets rising from 16% in 2008 to 32% in 2014.
  • In South America, this is the case for Chile and Peru, with Chile allocating 44% of total assets to foreign markets in 2014 and Peru investing 41% for the same period.  Brazil, in contrast, invested less than 1% in foreign markets in 2014 due to stringent regulatory barriers which are beginning to soften. 
  • When investing abroad, pension funds favour equity investments but adopt different strategies:
  • Some pension funds develop asset management teams based abroad. For example in 2011 Norges Bank Investment Management, which manages the Government Pension Fund Global for Norway, established a subsidiary in Luxembourg to oversee direct and indirect real estate investments in Continental Europe. The South Korean National Pension Service opened an office in London in 2012, followed by another in Singapore three years later.
  • Another strategy includes acquisitions or partnerships with asset managers that have expertise in foreign markets. In 2012 Fidante Partners, which manages the Australian government’s pension funds bought a significant stake in MIR Investment Management, a specialist in Asia-Pacific equities.
  • Investing in foreign funds is another efficient way to invest abroad. Nearly all mature pension markets tend to use investment funds when investing a large percentage of their assets abroad as they are one of the most effective and convenient vehicles for gaining exposure to international assets, giving liquidity and exposure to a wide variety of global assets that are not always available in a domestic market. For less developed pension markets, a higher usage of investment funds is expected over the coming years. Developing countries are likely to follow the move of the Chilean pension funds, which have been achieving higher diversification through the use of UCITS funds.

Ms Voss concludes: “A key finding of this report is the importance of investment funds in the diversification of the portfolios of pension funds around the world. Investment funds, and UCITS investment funds in particular, provide pension funds with a substantial degree of liquidity, diversification and a very high level of investor protection.”

[1] Excluding the US

Download the press release in English, French and German.

The study "Beyond their borders: evolution of foreign investment by pension funds" can be downloaded here.

Updated on 22/09/15
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- Press releases

The Luxembourg Stock Exchange in cooperation with the Association of the Luxembourg Fund Industry (ALFI) has announced today the publication of a compendium of Luxembourg laws and regulations on investment funds.

The compendium, currently published in English, French and German and made up of two separate publications in each language. The first publication covers undertakings for collective investment in transferable securities (UCITS) established under Luxembourg law and contains the amended Law of 17 December 2010 on undertakings for collective investment as well as the main regulatory texts relating thereto.

The second publication covers alternative investment funds (AIFs) established under Luxembourg law and other investment vehicles which are neither UCITS nor AIFs. It contains the amended Law of 12 July 2013 on alternative investment fund managers (AIFM), the amended Law of 17 December 2010 on undertakings for collective investment, the amended Law of 13 February 2007 on specialised investment funds, the amended Law of 15 June 2004 on the investment company in risk capital as well as the main regulatory texts relating thereto.

Denise Voss, Chairman of ALFI, comments: “The publication of such a reference booklet was long overdue. The number of laws, regulations and circulars impacting investment funds is steadily increasing. Fund professionals now have access to a single source book for each particular type of fund, containing all main legal texts and accompanying circulars.

I am convinced that these publications will prove extremely useful to the international investment fund community”.

Robert Scharfe, Chief Executive Officer of the Luxembourg Stock Exchange, adds: “Investment funds are the second largest segment on the Luxembourg Stock Exchange, with more than 6,500 listings. As an international exchange serving a global base, these two publications respond to a clear need from the fund industry and provide an essential reference”.

These two publications of the main legal and regulatory texts were produced by the two Luxembourg law firms, Arendt & Medernach and Elvinger, Hoss & Prussen, who have actively cooperated to select and compile the legal and regulatory texts that are relevant for the different types of investment vehicles concerned. These two law firms have also prepared the English and German translations.

These publications are available in French, English and German and may be downloaded at and at

Regular updates will be published to keep track with ongoing changes and additions to Luxembourg laws, regulations and circulars.

The press release is available in English, French and German.

Updated on 14/09/15
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- Press releases

Luxembourg is the second largest European domicile for ETFs with 465 funds units and some 82 bn EUR of AUM (end of June 2015). Luxembourg notably continues to attract ETFs sold on an international basis, gathering around 35% of the total authorisations in Europe for cross-border distribution of ETFs.

ALFI has set out ten reasons for managers to make Luxembourg their ETF domicile. Reasons include:

  • Outstanding distribution support, with Luxembourg-domiciled investment funds being sold into more than 70 countries.
  • A state-of-the-art legal and regulatory framework, allowing for all types of traditional and alternative funds, including all types of ETFs.
  • The quality of Luxembourg’s market infrastructure, as it is home to one of the largest ETF settlement infrastructures.
  • An efficient tax environment for ETFs.
  • Strong expertise, with a strong concentration of investment fund experts who are specialised in all aspects of product development, administration and distribution.

Many investors find ETFs attractive as they’re listed on stock exchanges and can be traded easily, and offer investors diversification, liquidity and transparency, all at a low cost. ALFI expects to see continued growth and further innovation when it comes to this kind of products, such as the development of ETFs investing in China or in RMB, in Islamic finance, or in socially responsible projects. Luxembourg is already ideally placed to domicile these funds.

Download the press announcement here.

Updated on 10/09/15
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- Press releases

Send your tweet to @ALFIfunds using the hashtag #askALFI!

The ALFI communications team will suggest the subjects which will be related to the latest industry trends or topics discussed at specific ALFI events.

ALFI will answer selected questions via short video messages taking into account that we are limited to six per event.

Updated on 07/09/15
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Send your tweet to @ALFIfunds using the hashtag #askALFI!

The ALFI communications team will suggest the subjects which will be related to the latest industry trends or topics discussed at specific ALFI events.

ALFI will answer selected questions via short video messages taking into account that we are limited to six per event.

Updated on 07/09/15  
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- ALFI statements

On 17 August 2015, ALFI responded to the technical discussion paper on packaged retail and insurance-based investment products (PRIIPs), which was published end of June 2015 by the European Supervisory Authorities (ESAs).

The ESAs are mandated by the Regulation on Key Information Documents for Packaged Retail and Insurance-based Investment Products to develop draft Regulatory Technical Standards (RTS) on the content and presentation of the Key Information Documents (KIDs) for PRIIPs. The aim of the latter is to provide EU retail investors with consumer-friendly information about investment products with the ultimate aim of improving transparency in the investment market.

The technical discussion paper aimed to collect views on the possible methodologies to determine and display risks, performance and costs in the KID for PRIIPs.

Click here for ALFI’s response.

Updated on 18/08/15
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- ALFI statements

ALFI responded to the EC consultation on regulation EU No 648/2012 on OTC derivatives, central counterparties and trade repositories.

Download the document here.

Updated on 14/08/15
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- Press releases

The Board of Directors of the Association of the Luxembourg Fund Industry (ALFI), has appointed Freddy Brausch, Partner at Linklaters LLP in Luxembourg, as Vice-Chairman focusing on National Affairs and Michael Ferguson, Partner at EY Luxembourg, as Vice-Chairman focusing on International Affairs. The Board of Directors furthermore renewed the mandate of Julien Zimmer, General Manager Investment Funds at DZ Privatbank S.A., as Treasurer of the association.

The Chairman, the Vice-Chairmen, the Treasurer and the Director General form ALFI’s Executive Committee. 

Freddy Brausch is the Managing Partner of Linklaters LLP in Luxembourg and has been a partner in the Investment Management Group since 1988.

Michael Ferguson is the EY EMEIA Regulated Funds Practice and Luxembourg Wealth & Asset Management Leader. He has an experience of more than 30 years in the investment fund industry in Luxembourg, Ireland, the UK and the US.

Julien Zimmer is the General Manager Investment Funds in charge of coordinating the DZ PRIVATBANK S.A.’s Investment Fund Business and has been actively involved in the industry since 1983.

Updated on 17/07/15
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- ALFI statements

ALFI responded to the OECD Public Revised Discussion Draft “BEPS Action 6: Preventing Treaty Abuse” dated 22 May 2015.

ALFI has taken note of the OECD Revised Discussion Draft “BEPS Action 6: Prevent Treaty Abuse” dated 22 May 2015. This follows a previous consultation “Follow up Work on BEPS Action 6: Preventing Treaty Abuse” to which ALFI responded on 9 January 2015 (click here to access the previous response). These two consultations must be read in conjunction with the report “BEPS Action 6: Preventing the Granting of Treaty Benefits in Inappropriate Circumstances”.

ALFI’s response addresses the situation of collective investment vehicles (“CIVs”) being widely-held, diversified, and subject to investor-protection regulation in the country of establishment of the CIV, as previously defined by the 2010 OECD report on treaty eligibility for investors in CIVs and section A of the Follow-up Discussion Draft relating to the limitation-on-benefits (LOB) provision and treaty entitlement.

ALFI again takes the view that CIVs set-up as UCITS or non-CIVS with similar characteristics should automatically qualify as resident under article 1 of the OECD Model Tax Convention as well as for the LOB rule. CIVs and UCITS are principally set up for genuine commercial reasons and given their economic characteristics it is reasonable to conclude that CIVs cannot, in principle, be effectively used for treaty shopping.

Finally, ALFI also suggests to include a statement that Contracting States are encouraged to consider that UCITS and comparable non-CIVs will not be considered as creating opportunities for treaty shopping.

You may access ALFI’s response here.

Updated on 07/07/15
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