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- Press releases

How is Luxembourg positioning itself in follow-up of COP21 in Paris?
Marc Bichler, Ambassador-at-large for climate change, Ministry of Foreign and European Affairs, Government of the Grand Duchy of Luxembourg, comments on the post-COP21 initiatives in the financial sector.

At the COP21, 195 countries plus the European Commission expressed their political will at the highest level to launch the transition from the fossil fuel economies and lifestyles towards renewable energies and increased energy efficiency. It is important to recognise that in this energy transition lie many new and huge economic opportunities including for job creation as well as opportunities for investment. The implementation of this unprecedented global political commitment in the fight against the climate change will require very important new flows – financial flows both from the public and from the private sector side.

The governments would be well advised around the globe to examine how to make the best use of their public funding in order to leverage private sector investment. Luxembourg government for its part is doing so for certain as we speak in close consultations with private sector actors as well as the multilateral partners like European Investment Bank for example. The aim being to establish Luxembourg also as an international centre for climate finance.

Read Marc Bichler's speech at the ALFI European Alternative Investment Funds Conference on 19 & 20 January 2016.

Updated on 05/02/16
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- Press releases

With 3,506.2 billion EUR of assets under management as at 31 December 2015, Luxembourg retains its position as the leading investment fund domicile in Europe, growing by 13.29% last year. The number of investment funds stood at 3,878. As at the end of November, Luxembourg accounted for 42.43% of all net sales in Europe.

With 3,506.2 billion EUR of assets under management as at 31 December 2015, Luxembourg retains its position as the leading investment fund domicile in Europe, growing by 13.29% last year. The number of investment funds stood at 3,878. As at the end of November, Luxembourg accounted for 42.43% of all net sales in Europe.

Investment funds domiciled in Luxembourg and initiated by US and UK asset managers represent the 1st and 2nd largest net assets under management, namely EUR 759.8 billion and EUR 581.5 billion, respectively, at the end of 2015.

Luxembourg is also increasingly recognised as a prominent hub for alternative investment fund managers with 211 authorised AIFMs, 626 registered AIFMs and 950 limited partnerships. For real estate and private equity funds, Luxembourg is leading the way in Europe.

Denise Voss, Chairman of ALFI, comments: “The high net sales that we continue to see demonstrate that the Luxembourg investment fund product remains a preferred choice for the international investor. Likewise, fund promoters from 69 countries around the world continue to use Luxembourg as their platform for marketing their funds internationally.”

2015 also marked further developments with the gradually opening Chinese market, with Luxembourg remaining Europe's leading financial centre for RMB denominated investment funds, demonstrated by the fact that:

  • Chinese asset managers launched investment funds in Europe by selecting Luxembourg as the domicile for their funds, including: Harvest Fund Management, CSOP Asset Management (China Southern AM), China AMC, ARC China, Oriental Patron, Guotai Junan, BOCOM Schroders, GF International, China Universal and E-Fund.
  • Luxembourg UCITS received permission to participate in the Hong Kong-Shanghai Stock Connect scheme as early as 2014 and, by 2015, 81 Luxembourg domiciled investment funds were  authorised by the CSSF to take advantage of the facility (alongside QFII and RQFII) to invest in China A-shares listed on the Shanghai stock exchange.
  • In April 2015, the People's Bank of China announced the granting of a 50 billion RMB RQFII quota to Luxembourg. ICBC Europe and Bank of China (Luxembourg) SA are the first financial institutions to have benefited from this program in the amount of 4 and 2 billion RMB, respectively.

Although further growth opportunities for the industry exist, there is also a need for caution, for a number of reasons. The Capital Markets Union (CMU) is very positive for the asset management community as CMU can leverage the potential of investment funds to contribute to overall economic growth in a number of ways. For example, investment funds can help resolve long-term issues like retirement funding and the financing of innovation and infrastructure. In addition, the newly introduced ELTIFs play an important role in this context, as does the Luxembourg ‘Reserved Alternative Investment Fund’ which will provide a timely additional and useful alternative investment fund regime.

However, several factors, including increased competition between financial centers, the uncertain economic environment and the current high volatility of capital markets mean that continued steady growth is far from certain.

“In order to sustain the sector’s development, ALFI will continue to communicate to its stakeholders – including the general public - the essential role that investment funds play in creating jobs and sustainable growth by channelling capital into the economy”, says Denise Voss.

Another factor that is likely to present growth potential for the industry is technology. At the same time technology and big data can also be disruptive forces, as they may fundamentally change the way investors interact with the asset management industry. Asset managers will require support to develop new business models and ALFI has therefore launched the ALFI FinTech Forum to spread digital know-how within its asset management community and to focus on practical developments that will help the Luxembourg asset management centre to thrive, both today and in the future.

Finally, the pace of regulation has been very intense over the last few years. Although each individual piece of regulation is founded on the good intention of protecting the investor, when added together they can not only create a compliance challenge, but also lead to additional costs for companies and, in turn, their clients. Going forward, ALFI will continue to engage pro-actively with national and international stakeholders to promote ‘better’ rather than ‘more’ regulation.

Denise Voss concludes: "The overall environment in which the asset management industry evolves has rarely been as diverse as today. If some recent developments and trends clearly have the potential to stimulate the sector, others are more likely to have a negative impact. However, our industry players’ proven capacity to adapt to a rapidly changing environment and the fact that Luxembourg funds are distributed on such a large scale around the world lead me to believe that our industry can continue to progress in the coming years."


Download the press release in English and French.

Updated on 03/02/16
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- Publications

New questions regarding the "UCITS V" implementation

On 1st February 2016, the European Securities and Markets Authority (ESMA) published a consolidated version of its Questions & Answers (Q&A) on the application of the UCITS Directive. 

The consolidated Q&A consolidates all Q&As relating to the UCITS Directive previously issued by ESMA into a single document:

  1. the Key Investor Information Document (KIID) for UCITS (2015/ESMA/631);
  2. ESMA's guidelines on ETFs and other UCITS issues (ESMA/2015/12);
  3. Notification of UCITS and exchange of information between competent authorities (ESMA/2012/428); and
  4. Risk Measurement and Calculation of Global Exposure and Counterparty Risk for UCITS (ESMA/2013/1950).

These four Q&As are hereby repealed and replaced by this document.

Moreover, the Q&A includes new questions on additional documents funds need to provide for the "UCITS V" implementation by the deadline transposition date of 18 March 2016.

More specifically ESMA confirmed the following:

  • With regard to remuneration-related information, the updates to the UCITS KIID documents will need to be performed at the next annual update after 18 March 2016 (or on the first occasion after 18 March 2016 as the information becomes available). Similarly, a UCITS will be allowed to add the relevant information to the prospectus at the next occasion and in any event by 18 March 2017. As to the annual report, for those disclosures relating to periods that end on or after 18 March 2016, but before the UCITS management company has completed its first annual performance period in which it has to comply with articles 14a and 14b of the Directive, the UCITS management company should include the remuneration-related information in the report on a best efforts basis and to the extent possible, explaining the basis for any omission.
  • With regard to the depositary appointment contracts, the Q&A re-iterate that UCITS V will apply as of 18 March 2016 and that depositary contracts should be revised "promptly" in accordance with the transitional arrangements allowed by the Level 2 delegated act transmitted to the co-Legislators in December (and still awaiting adoption).

The Q&A can be found here.

Updated on 29/02/16
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- Press releases

Jean-Marc Goy (CSSF) comments on the regulatory agenda to come up in 2016 in the field of investment funds sector.

"Two topics come to my mind: the Capital Markets Union (CMU) which is more a topic for politicians than the supervisory authority as the discussions will be led mainly by the politicians, however it will also have implications for the asset management sector. Mainly, I’m thinking of the European Long Term Investment Funds (ELTIF) - like many other stakeholders, I’m curious to see whether it will be a success or not – but let’s try to be optimistic!"

Mr. Goy continues: "The second topic I see is the agenda of ESMA - and here there are no surprises – ESMA will continue its work towards more convergence both for UCITS and non UCITS. Speaking of UCITS, this year is also a year when UCITS V will enter into force."

Mr. Goy spoke at the ALFI European Alternative Investment Funds Conference on 19 & 20 January 2016 in Luxembourg.

View other interviews and the full report of the event here.

Updated on 01/02/16
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- Press releases

The ALFI European Alternative Investment Funds Conference took place on January 19-20 2016 and was attended by more than 600 delegates.

The conference was opened by Denise Voss with some encouraging figures: since the introduction of the Alternative Investment Fund Managers Directive (AIFMD), Luxembourg has counted 211 authorised AIFMs, 626 registered AIFMs and 950 special limited partnerships. “Clearly alternative investing is coming into the mainstream and is of growing importance to the Luxembourg investment fund centre,” said Denise Voss.

Denise Voss highlighted the proposed Reserved Alternative Investment Fund (RAIF) as the latest innovation in Luxembourg’s drive to enlarge its legal toolbox. “The RAIF is a response for sophisticated investors who are looking for a fund product that offers more flexibility than a corporate vehicle,” she noted.

She also emphasised that the ALFI FinTech Forum has now been officially launched: At a specific ‘FinTech Corner’, twelve innovative FinTech companies used lunchtime to present their offer to the participants during the two days of the conference.

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A socially useful industry

The UN climate change conference in Paris at the end of last year sent a clear signal to the financial sector in general and the investment community in particular. The commitment by 196 countries to reduce carbon dioxide emissions means demand for climate change finance will reach unprecedented levels, said Marc Bichler, Luxembourg’s Ambassador-at-Large for climate change.

Financial flows will come from a variety of sources from within the public and private sectors, with the International Energy Agency predicting $13.5tn in renewable energy investments by 2030. However, there is currently a lack of financial instruments to act as an interface between investors and investable climate-friendly projects, Mr Bichler said. ALFI has participated in a task force aimed at submitting proposals to the Luxembourg government to channel finance to climate change projects. 

Meanwhile, CMU, which aims to strengthen capital markets and provide more sources of funding to EU companies, is under scrutiny. Take up of European Venture Capital Funds (EuVECA) and European Social Entrepreneurship Funds (EuSEF) has been slow and Giovanni Garcea, a Policy Officer at the European Commission, reminded the audience that the rules around these vehicles were currently being reviewed.

The take up of ELTIFs is expected to be faster. The Luxembourg government is currently preparing a draft law to allow the ELTIF to benefit from double tax treaties, provided certain conditions are met. “We may see a specific ELTIF law tailored to the needs of the market before the summer,” said Freddy Brausch, Partner at Linklaters in Luxembourg. According to Agathi Pafili, Senior Regulatory Policy Advisor at the European Fund and Asset Management Association (EFAMA), “we need funds and accompanying tax incentives that meet the needs of all investors.”

Going beyond digital

“In the next two to five years we will see the largest institutional shift in the history of humanity,” That is the view of Leonard Brody, a venture capitalist and Emmy nominee, who has coined “the great rewrite”. The biggest driver of this great rewrite is that technology puts ordinary people, rather than institutions, in a position of power. Capital markets will change, industry incumbents will no longer be protected and customer service will be the most important element of most businesses, he predicted.

What does this mean for the investment industry? For a start, the $13tn that was invested in FinTech last year will double over the next two years. FinTech will change expectations about customer experience; clients will expect the same experience that they receive from pure technology companies such as Apple, Uber and Airbnb.

The wealth of Generations X and Y will exceed that of babyboomers by 2018 and the investment industry needs to be able to attract and keep that wealth. New entrants to the industry will be vying to manage this wealth. Up to 98% of heirs switch advisors, noted Likhit Wagle, of IBM Global Business Services. “Fiduciary advice and deposit taking will stay with incumbents because of regulation, but everything else is fair game,” said Mr Wagle.

Traditional players can respond to the threats by learning how to leverage their key competitive advantage: data. At the moment much of that data is unstructured.

For alternative firms, the FinTech revolution will enable them to disintermediate traditional sources of finance. Private equity and real estate will enjoy greater liquidity through auctions and crossing mechanisms, while hedge fund portals will become more sophisticated.However, it was widely noted that, as in the dotcom era of the late 1990s, some FinTech companies will thrive while some more will fail. “We need to take a step back and see what start-ups are useful and how can we develop them in Luxembourg,” said Nicolas Buck, CEO of Seqvoia.

Real estate – Luxembourg assets on the rise

ALFI’s annual Real Estate Investment Fund Survey in conjunction with EY Luxembourg revealed that real estate assets in Luxembourg had reached more than €39bn by the middle of 2015, up from €32bn a year before. The total number of REIFs increased by 10% from the last survey and, since 2006, the number of direct REIFs has grown by a compound annual rate of 16.45%.

Further growth in both funds and assets is likely over the coming years given that many non-EU real estate funds do not have a third-party passport under AIFMD.

Private equity – change in investor perception

There are now more than 950 special limited partnerships in Luxembourg, which are used to a large extent for private equity investments. Private equity exits last year totalled $220bn, the second highest total after 2014. “Next year will be a strong year for private equity for the simple reason that a lot of money went back to LPs over the last two years and needs to be reinvested,” said Alain Kinsch, Country Managing Partner and EMEIA Private Equity Fund Leader at EY Luxembourg. The increasingly regulated nature of private equity is changing investor perceptions and higher allocations from public bodies, including pension funds, can be expected. 

Hedge funds – demand for liquid funds

The hedge fund industry is in good health with more new fund launches in 2015 than in 2014, and with 50% of managers expecting to launch funds this year to meet the changing demands of investors and markets.

New hedge funds will increasingly be launched onshore as European institutional investors seek EU-regulated funds. Many of these may be parallel structures set up in jurisdictions like Luxembourg, rather than the relocation of existing funds.

Despite a year of relatively poor hedge fund performance, many investors are satisfied with their hedge fund investments, according to William Jones, founder of Luxembourg’s ManagementPlus Group. “Investors are looking to hedge funds to diversify their portfolios rather than relative outperformance,” said Mr Jones.

Some conference participants expressed concerns that the expansion of central bank balance sheets worldwide will lead to market turmoil. At least one investment manager felt that any future crisis might be caused by an over-issuance of cheap corporate debt. The advice to hedge funds was to truly hedge their portfolio.

Emergence of alternative financing

Of the $8tn of assets managed in global alternative funds, two-thirds are managed in hedge and real estate funds and 25% is in private equity. Private credit and infrastructure represent just 5% of the industry. By 2020, infrastructure and private credit are expected to become a much bigger proportion of the whole. A survey by the Alternative Investment Managers Association (AIMA) on private debt in 2015 found that a third of members participated in debt and credit strategies.

Debt and credit funds can open opportunities in niche markets such as lending to SMEs, said André Prüm, Professor of Banking and Financial Law at University of Luxembourg. These types of opportunities are being encouraged at EU level through the Capital Markets Union (CMU) initiative, and at national level via public and private initiatives. For investors, the attraction of these investments is yield, stability and diversification.

Debt funds for real estate investment are proliferating, said Pierre Weimerskirch, Managing Director, Luxembourg Investment Solutions. “Yields on loan products are close to those on core real estate,” Mr Weimerskirch added.

Regulators are starting to pay attention to the sector and the European Commission is to assess funds which originate loans. Nathalie Dogniez, Partner at PwC Luxembourg, pointed out that Luxembourg Specialised Investment Funds (SIFs) are permitted to originate loans.

AIFMD – next steps

AIFMD is now a fact of life for European alternative investment managers and many have embraced the opportunities.

Investors in real estate funds, for instance, are often reassured by a local presence and appreciate when their assets are managed by local structures and managers who have knowledge of local dealflow. In this sense, AIFMD offers an additional layer of comfort.

In private equity, fundraising is periodic, so not all managers have had a chance to test whether the AIFMD passport provides distribution advantages.

The possibility of obtaining the passport has moved closer for investment firms in some third-party countries. Richard Stobo, Team Leader for Investment Management, ESMA, announced that the assessments of the US, Hong Kong and Singapore would be completed by the end of June 2016. Meanwhile, assessments of six additional countries – Bermuda, Canada, Japan, Australia, Cayman Islands and Isle of Man – will also be undertaken by June. Those that pass the test will join Guernsey, Jersey and Switzerland as approved passport jurisdictions.

Mr Stobo also announced that the decision whether to curtail private placement regimes can only take place after the passport assessments.

What's new in financial technology?

In a series of quick-fire presentations, selected FinTech companies showcased promising innovations in financial technology and shared their vision and ideas with the audience. Access summaries of presentations by clicking on the company logos below.


Updated on 01/02/16
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- ALFI statements

On 26 January 2016, ALFI responded to the consultation on Regulatory Technical Standards (RTS) for Packaged Retail and Insurance-based Investment Products (PRIIPs) conducted by the European Supervisory Authorities.

Updated on 01/02/16
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- ALFI statements

On 29 January 2016, ALFI responded to the call for evidence “EU regulatory framework for financial services”, which was published by the EU Commission end of September 2015.

Updated on 01/02/16
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- Press releases

The Association of the Luxembourg Fund Industry (ALFI) released today the 2015 Real Estate Investment Funds (REIF) survey, produced by EY Luxembourg, showing the development of the Luxembourg-domiciled REIF and Funds of REIF market as at the end of June 2015.

For the first time a new category of investment vehicle – the “Manager-Regulated AIF”[1] has been included in addition to direct real estate funds (Direct REIFs), Real Estate SICARs and Funds of REIFs. 

Denise Voss, Chairman of ALFI, said: “We have now been doing the survey on Real Estate Investment Funds since 2006 and over that time the market has changed considerably. Luxembourg’s aim is to create effective solutions for asset managers enabling them to distribute their funds globally and we believe that this latest edition of the survey confirms Luxembourg’s success in achieving that aim.”

Kai Braun, Partner and Alternatives Advisory Leader at EY, said: “The survey results clearly underline the positioning of Luxembourg as domicile of choice for real estate investment funds established with the aim to invest internationally and distribute cross-border. Since the introduction of the AIFMD, the trend of setting up international fund vehicles in the Grand Duchy has even increased with non-EU managers using Luxembourg as a European distribution hub.”

The total number of REIFs in the survey has increased by 10% since the last ALFI REIF survey in 2014 and, since  2006, the number of direct REIFs (excluding Manager-Regulated AIFs), have shown a compound annual growth rate (CAGR) of 16.45%.

EY findings of the survey include:            

  • The number of new Luxembourg domiciled REIFs has increased:
    • 27 Direct Funds, including three Manager-Regulated AIFs were launched in 2014 compared to 18 Direct Funds, including two Manager-Regulated AIFs, in 2013 ;
    • Five funds of REIFs were launched in 2014 compared to only two during 2013 and one in 2012.
    • Early signs for Q1 and Q2 2015 are good with eight new SIFs, three Manager-Regulated AIFs and a single 2010 Part 2 Fund;
  • The most common target sector remains ‘multi-sector’ with 61% (compared to 57% in the 2014 survey). Among the sectors themselves, the category of “retail” was the strongest preference with 45% of respondents indicating this as their sector of choice, compared to only 27% last year;
  • Geographical investment strategies focus on a single country in 40% of the funds (stable from 2014 but up from 35% and 27% in the preceding two years), which supports the trend toward simplification.  70% of the surveyed Direct Funds invest only in Europe, whereas 8% of funds invest only in the Asia Pacific region and 3% invest only in the Americas;
  • Investors come mainly from Europe.  However a significant portion comes from the Americas, Asia and the Middle East, confirming the global appeal of the Luxembourg fund regimes;
  • Luxembourg domiciled Direct Funds and Funds of REIFs are mainly used for small groups of institutional investors, with 87% having less than 25 investors – an increase of 3 percentage points compared to the last ALFI REIF survey;
  • Only 2% of the surveyed REIFs reported having more than 100 investors;
  • The Direct Funds are widely distributed (but with focus on specific geographical areas), with only 26% limited to a single country, and 20% being sold in more than six countries. The largest proportion can be observed in the category of two to five countries, into which 54% of funds fall;
  • Though umbrella funds remain popular for practical and cost reasons, the trend over the last few years has been towards simplification of structures and strategies, a trend which was again in evidence in the 2015 survey;
  • Specialized Investment Funds (SIFs) account for all of the REIFs launched in the last 30 months (excluding Manager-Regulated AIFs) and the SIF regime is now firmly established as the favoured regime for regulated REIFs and Fund of REIFs in Luxembourg. SCS/SCSp partnership legal forms are an increasing trend since the updating of the Luxembourg Partnership laws in 2013;
  • In line with previous surveys, smaller funds continue to make up the majority of direct REIFs, with 61% falling in the category of below EUR100 million net asset value (NAV);
  • The number of funds with significant gearing has increased, with a greater proportion reporting a target gearing in the 50%-60% range and the over 70% range. This could indicate optimism in relation to the ability to borrow;
  • The proportion of funds reporting under IFRS has decreased slightly from the previous year to 40% in 2015 compared to 42% in 2014. Funds launched in the first half of 2015 mostly report under IFRS (75%), whereas funds launched in 2014 were mostly reporting under Lux GAAP (68%).

Download the press release in English and French.

[1] A “Manager-Regulated AIF” refers to an investment fund which is not established under a regulated fund regime in Luxembourg (e.g. SIF/SICAR), but instead is formed solely under corporate or partnership law. The managers of such a vehicle are typically themselves regulated or registered directly under the AIFMD.


Updated on 20/01/16
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- ALFI statements

On 6 January 2016, ALFI and the Luxembourg Private Equity and Venture Capital Association (LPEA) responded to the EU Commission consultation on the review of the EuVECA and EuSEF Regulations.

Updated on 08/01/16
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- Press releases

27 January 2016, 5pm CET 

Get the basics on the tool intended to protect shareholders from account trading and market impact costs.

Geoff Radcliffe
, Managing Director of BlackRock (Luxembourg) S.A. and ALFI Board Member
Elisa O'Keefe, Vice President, Fund Administration, State Street Global Services

Swing pricing which has been applied in Luxembourg for the past 15 to 20 years, has proven to be an efficient mechanism to protect existing shareholders from dilution associated with shareholder purchases and redemptions as well as an additional tool to help manage liquidity risks. In the United States, swing pricing is just now gaining traction, especially with new rules finalized and work underway to protect money market investors, the Securities and Exchange Commission has now shifted its focus to safeguards for shareholders of open-end mutual funds and certain exchange traded funds (ETFs). The SEC has proposed new rules and amendments to rules which seek to protect fund investors during periods of large investor withdrawals.

Join the Association of the Luxembourg Fund Industry and NICSA for this jointly produced and presented webinar. Hear perspectives from European and American experts on swing pricing.

Additional Resources:

Updated on 27/01/16
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