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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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- Press releases

The trend towards greater adoption of swing pricing continues. The third edition of ALFI’s Swing Pricing Survey shows both a greater number of participants responding to the survey and a greater number of asset managers that have implemented the mechanism.

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 funds manage liquidity risks. This technique is therefore perfectly in line with ALFI’s main objectives to protect investors and to foster dedication to professional standards, integrity and quality.

The 2015 version of the ALFI Swing Pricing Survey increases the scope and depth of the previous survey done in 2011 and provides more detailed insights into how swing pricing is currently applied by asset managers, common trends, emerging themes and the challenges the industry faces in this regard.

The survey was conducted by a dedicated ALFI working group throughout July to September 2015 and targeted the largest 65 Luxembourg asset managers. 45 companies participated to the survey. They represent approximately USD 2,500 bn of assets under management, which is 69% of the assets of the Luxembourg domiciled funds (July 2015 figures).

Exactly two out of three respondents, who manage a combined USD 1,900 bn of net assets (54% of total assets under management in Luxembourg funds) apply swing pricing. More than half of the asset managers not yet applying swing pricing stated they were in the process of evaluating it, and wanted to understand more about the key principles, drivers and theories. These managers might benefit from the updated Swing Pricing Guidelines ALFI has published alongside with the survey.

The 2015 ALFI Swing Pricing Survey is available in a PDF format on this link.

Updated on 18/12/15
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- Press releases

ALFI welcomes the publication of a draft law relating to a new Luxembourg alternative fund structure, the Reserved Alternative Investment Fund (RAIF).

The bill will run through the usual legislative process and is therefore still subject to change. A final text of the law might be adopted in the second quarter of 2016.

Denise Voss, Chairman of ALFI, explains: “The future Luxembourg RAIF Law will provide an additional – complementary – alternative investment fund regime which is similar to both the Specialised Investment Fund and SICAR regimes.”

Currently Luxembourg rules not only require the Luxembourg Alternative Investment Fund Manager (AIFM) to be authorised and regulated by the CSSF but also require the Alternative Investment Fund (AIF), usually a Part II UCI, a SIF or a SICAR, to be authorised and supervised by the CSSF. The CSSF approves and supervises the Luxembourg AIFM and the Luxembourg AIF separately.

The new RAIF is an AIF that has very similar features to the Luxembourg SIFs and SICARs with the key difference that the RAIF does not need to be approved and is not supervised by the CSSF.

Jacques Elvinger, partner at Elvinger, Hoss & Prussen and Chairman of ALFI’s Regulation Advisory Board, highlights the benefits of the new regime: “Managers will benefit from a reduced time-to-market because the RAIF itself does not have to be approved by the Luxembourg regulator. Going forward, managers will be able to choose whether to set up their Luxembourg AIF as Part II UCI, SIF or SICAR if they or their investors prefer for the AIF to be supervised by the CSSF, or to set up their AIF as a RAIF, which does not need to be approved and supervised by the CSSF, with consequent time-to-market benefits."

Claude Niedner, partner at the law firm Arendt & Medernach and Chairman of ALFI’s alternative investments committee, explains: “A regime of double authorisation and supervision is not required by the AIFMD. The AIFMD regulates the managers of AIFs, and “only” asks them to ensure that the AIF complies with certain product rules and to report on its AIFs on a regular basis. The RAIF legislation will enable Luxembourg and foreign AIFMs to benefit from a flexible and innovative investment fund vehicle.”

In order to ensure sufficient protection and regulation via its manager, a RAIF must be managed by an authorised external AIFM. The latter can be domiciled in Luxembourg or in any other Member State of the EU. If it is authorised and fully in line with the requirements of the AIFMD, the AIFM can make use of the marketing passport to market shares or units of RAIFs on a cross-border basis. As is the case for Luxembourg SIFs and SICARs, shares or units of RAIFs can only be sold to well-informed investors.

“The new structure will complement our attractive range of investment fund products in Luxembourg and we believe this demonstrates the understanding the Luxembourg lawmaker has of the needs of the fund industry to best serve the interests of investors.“ concludes Denise Voss.

The draft law can be consulted on this link.

Updated on 17/06/16
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- Press releases

ALFI’s Hong Kong office celebrates five successful years! The Association of the Luxembourg Fund Industry (ALFI or the Association) today celebrated the fifth anniversary of the opening of its Asia Representative Office in Hong Kong at the Association’s annual roadshow in the region. Asia has become the main non-European market for UCITS funds, totalling approximately 62% of total UCITS registrations outside of Europe. 

Luxembourg’s position as the international fund centre of reference continues to grow in Asia, with 215, 148 and 371 registrations respectively, attending ALFI’s financial seminars in Tokyo, Tapei and Hong Kong this week. The seminars addressed practical solutions offered by the Luxembourg fund industry for structuring Luxembourg based UCITS and alternative investment fund products, discussed how better governance benefits investors and examined the current distribution and product innovations under both UCITS and AIFMD.

“Through our ongoing activities in Asia, we have developed strong relationships with stakeholders from the various Asian fund jurisdictions and we continue to work with them on key issues that impact the industry,” said Mr Camille Thommes, Director General of ALFI.

“Since the opening of our office in Hong Kong five years ago, the Chinese economy and financial markets have undergone a remarkable transformation and seen significant growth. More specifically, the Chinese equity market has grown to the second largest equity market in the world after the US,” said Mr Thommes.

“ALFI has helped to make significant in-roads into the opening up of China’s capital markets. Luxembourg was the first country to authorise an RQFII UCITS in 2013 as well as the first country to authorise a UCITS to invest through the Shanghai – Hong Kong Stock Connect program,” added Mr Thommes. “Luxembourg is also Europe's leading financial centre in terms of RMB denominated investment funds.”

Launched in November 2014, the Shanghai – Hong Kong Stock Connect program represented one of the biggest developments for foreign investors wishing to access this market and enabled foreign investors to trade Shanghai-listed shares via the Hong Kong stock exchange, and mainland investors to invest in Hong Kong shares via the Shanghai stock exchange.

Over the past year, 69 Luxembourg UCITS funds as well as 12 alternative funds have received approval from the Luxembourg Supervisory Authority, the CSSF, to access Stock Connect.

The RQFII scheme was launched in Hong Kong in 2011 and has been expanded to other jurisdictions since 2013, allowing an increased volume of offshore RMB to be reinvested into China’s securities markets. In April this year, the People’s Bank of China granted a RMB 50 billion Qualified Foreign Institutional Investor (RQFII) quota to Luxembourg. ICBC (Europe) and Bank of China Luxembourg both recently received regulatory approval as the first Luxembourg-based RQFII holders.

Download the press release here.

Updated on 11/12/15
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- Press releases

The Association of the Luxembourg Fund Industry (ALFI) has published the third edition of its Swing Pricing Guidelines.

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 funds manage liquidity risks. This technique is therefore perfectly in line with ALFI’s main objectives to protect investors and to foster dedication to professional standards, integrity and quality.

ALFI’s new Swing Pricing Guidelines reaffirm key principles, reflect the evolution in working practice and provide clarification on a number of technical points in areas such as calculation of the swing factor, transparency and fund corporate actions.

The primary purpose of this paper is to provide insight and guidance concerning swing pricing, with consideration as to its advantages, operation and limitations relevant to both those considering adoption of a swing pricing programme and also to established practitioners.

It is not the purpose of the document to consider the pros and cons of swing pricing relative to other methods of dealing with dilution and it does not recommend swing pricing, or any other method, as an industry standard. Equally there is no intention to mandate the compulsory use of swing pricing. Should an asset manager decide to implement swing pricing, the document intends to provide practical guidance relating to the key elements to be considered and to recommend standards of best practice as endorsed by ALFI.

ALFI’s 2015 Swing Pricing Guidelines are available on this link.

Updated on 10/12/15
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Swing Pricing Guidelines

ALFI’s new Swing Pricing Guidelines reaffirm key principles, reflect the evolution in working practice and provide clarification on a number of technical points in areas such as calculation of the swing factor, transparency and fund corporate actions.

- Press releases

As the regulation of European Long-Term Investment Funds (ELTIFs), established by the European Commission to give new impetus to economic recovery in Europe, enters into force on 9 December 2015, the Association of the Luxembourg Fund Industry announces that Luxembourg is prepared and believes it has a key role to play in ensuring the success of ELTIFs.

“The objective of the EU in setting up ELTIFs was to boost smart, sustainable and inclusive growth,” said Denise Voss, Chairman of ALFI. “Take-up of the new funds may be a gradual process, but we believe that Luxembourg has the in-depth experience and expertise required to support fund promoters wishing to launch ELTIFs, and we are ready to assist them.”

Ms Voss continued: “To articulate the essential role of investment funds for the global economy is an important part of the ALFI 2020 Ambition. Luxembourg has practical solutions for ELTIFs, the Luxembourg legal framework offering a wide range of solutions to fulfil the needs of ELTIFs, their managers and investors.”

ELTIFs are an initiative of the European Commission under its Capital Markets Union plan. They are a pan-European regime for Alternative Investment Funds (AIF) which channel the capital they raise into European long-term investments in the real economy in order to achieve growth and create jobs.

The ELTIF represents a milestone in the development of the cross-border European long-term funds business. Their long-term focus distinguishes them from most existing investment vehicles and they are therefore particularly suitable for institutions such as pension schemes and insurance companies with long investment horizons, as well as complementing and diversifying individuals’ savings portfolios. 

Like the funds subject to the  Alternative Investment Fund Manager Directive (AIFMD) legislation, they must have an authorised alternative investment fund manager, but like UCITS, their pan-European marketing ‘passport’ allows them (under certain conditions) to be sold to individual investors who may not necessarily be classified as professional or sophisticated.

“The leading position of Luxembourg as a true cross-border and fund distribution hub will greatly serve the development of ELTIFs”, Ms Voss concludes.

ALFI has prepared brochure on ELTIFs which gives details on what ELTIFs could look like and what the regulatory requirements are. The document is available on the ALFI website

Updated on 09/12/15
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- Press releases

The ALFI TA & Distribution Forum 2015 edition took place on the 18th of November 2015 and was attended by delegates from Luxembourg, the UK, Ireland, the US and even from as far as Singapore.

The ALFI TA & Distribution Forum 2015 edition took place on the 18th of November 2015 and was attended by delegates from Luxembourg, the UK, Ireland, the US and even from as far as Singapore.

Prior to the event, a dedicated social media campaign was launched to highlight the key subject matters to be discussed during the Forum. A series of 12 thought leadership articles were delivered on a daily basis, over 12 days, via the LinkedIn Group ALFI TA & Distribution Forum and Twitter #ALFITA15.

These 12 articles now form part of the dedicated TA Forum library that will keep growing over the years, as and when all TA & Distribution matters are shared via the LinkedIn Group. We have scattered these here for ease of reference under the corresponding subject.

The success of the yearly ALFI TA & Distribution Forum just keeps growing since its existence. From what started as a roundtable discussion of 12 participants in 1999, this year’s TA Forum attracted more than 230 ALFI and non-ALFI members, a blend of TA & distribution operations industry experts, practitioners and service providers as well as asset managers and management companies.

Access ou photo gallery via this link.

The making of a global invisible giant

A journey from 1989 to the creation of the ALFI TA Steering Committee

Where is the TA and Distribution Support industry heading?

The fund industry's operating environment being constantly changing due to an evolving regulatory landscape and ongoing market developments, it was an opportune time to ascertain the current shape of TA & Distribution as well as to look ahead to where the TA and Distribution Support industry is heading.

What’s on the minds of TA's these days?

The cornerstone to fostering a safe and robust Distribution Operations value chain

The key theme of this year's ALFI TA & Distribution Forum was “TA 2015 - The cornerstone to fostering a safe and robust Distribution Operations value chain”.

This one-day event allowed participants to discuss the key subject matters that continuously transform Luxembourg’s Global TA & Distribution Operations operating model, namely the influence key regulatory and industry events have had over the last year and key market considerations for the near future. The talks have also featured initiatives taken by Luxembourg fund industry players to ensure the ease of doing business in Luxembourg-domiciled funds.

Alexander Fischer, ALFI TA Steering Committee (TASC) Coordinator

In his introductory speech, ALFI TA Steering Committee (TASC) Coordinator Alexander Fischer covered the state of the Luxembourg fund industry and how the fund distribution operations value chain aligns itself with ALFI’s 2020 Ambition Paper and more specifically with the objective to “ensure Luxembourg remains the fund centre of choice for asset managers".

The day’s chairperson, ALFI TASC Chairman Josée Lynda Denis, introduced the programme, canvassed the audience’s views via live surveys and provided the latest update on the ALFI TASC’s membership (24 member organisations, 32 active members) and working groups as well as its roadmap for 2015/2016. Primarily, the 4 TASC sub-working groups are currently addressing standardisation & automation, Distribution Support Services (DSS), TA regulatory developments & operational requirements and alternative investments operations.

Josée Lynda Denis, ALFI TASC Chairman

All TASC working groups’ subject matters were shared and discussed throughout the day.

The morning’s main theme "Moving towards a safe and robust distribution operations value chain" was covered in 4 distinct sessions, including two panels on KYD and distribution oversight.

Key success factors in fund distribution

Four good reasons not to go "direct"

Distribution – how many pieces to the puzzle?

Do you know your distributors?

More pressure on fund distribution from 4th AML directive

Entering a brave new world...Deep-dive into regulation

During the traditional “Regulation – What Else?” session in the afternoon, a panel of industry experts provided an update on current and imminent regulatory developments and requirements and their impacts on TA & Distribution.

The audience then split up into smaller groups to foster open questions and answers in two consecutive breakout sessions addressing operational subjects that are consistently transforming fund operations these days:

1. Challenges of a distribution landscape in (R)evolution - The automation quest and market infrastructure changes

  • Automation: Latest update on the EFAMA/SWIFT standardisation survey 2015
  • Tomorrow: a market infrastructure in (r)evolution – the case for T2S
  • A disrupted future: digitalisation and new technologie

Sue Lee, ALFI T2S Committee, Head of Cash & Settlement sub-working group

Keith Hale, Executive Vice President, Multifonds IGEFI Group S.à r.l.

Big Data – the future for Transfer Agency

Offshoring: a strategic move for Transfer Agents

2. FOCUS on Alternative Investments

  • Convergence of long-only funds to Alternative Investments
  • AIFMD survey

The long road to alternatives

Alternative UCITS and their operational risks

The full day’s presentations booklet provided to all participants constituted a useful memento of this yearly gathering of like-minded fund industry practitioners.

Since the Luxembourg TA & Distribution Forum community was launched in 1999, this was the 16th edition of the Luxembourg TA & Distribution Forum.

Many thanks to all participants for keeping this event growing strong.

We look forward to welcoming you and your colleagues back for the 2016 ALFI TA Forum !

Updated on 02/12/15
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