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Understanding Investing 简体中文网页 Members section

- Press releases

The European responsible investing fund market has almost doubled in size since 2010, reaching EUR 476 billion of Assets under Management (AuM) managed by 2’413 funds at the end of 2016 as the new KPMG Luxembourg/Broadridge statistics on the European responsible investing fund market commissioned by ALFI and LuxFLAG reveal.

Assets under management encountered a growth of 26.6% from 2014 to 2016, a substantial development across all ESG-cross sectoral and thematic (Environmental, Social) categories.

Luxembourg, Europe’s leading investment fund centre, has strengthened its position as number one domicile for responsible investing funds in Europe in general and in each of the underlying strategies, accounting now for 31% of funds and 35% of total Assets under Management. ESG cross-sectoral funds applying positive and negative screening strategies remain the largest market share with 1’687 funds and EUR 423.3 billion Assets under Management.

“Large institutional investors have started to publicly announce their divestments from coal, whilst asset managers are decarbonizing their portfolios and launching more climate funds. Unsurprisingly, our statistics on the European Responsible Investing fund market, reflect this increasing trend.” explains Charles Muller, Head of Responsible Investing, KPMG Luxembourg

The market has seen a clear boost in Climate Finance. Post-COP21, renewable energy and climate change funds increased their share to 36% in the Environment category, encountering a significant growth in the number of funds (42%) and AuM (47%) since 2014. The Luxembourg domicile again occupies the leading position in this category and accounts for 38% of funds and 45% of Assets under Management.

Responsible investing is increasingly driven by the spreading recognition that ESG factors play a material role in determining risk and return, as well as shaping the industry. Next to the established specialized investment managers, more and more mainstream asset managers are entering the market, seizing the opportunity of this flourishing sector. Increasing thoroughness and granularity of responsible investing strategies, processes and policies enhance market sophistication and drive total growth.

“Our analysis of the European responsible investing fund market shows that in Luxembourg, the annualized growth rate of the responsible investment fund sector over the past two years has exceeded the already very positive growth rate of the Luxembourg fund industry as a whole. The figures demonstrate not only raising investors’ awareness of responsible investing, but also Luxembourg’s solid position in this market compared to other EU domiciles.” comments Anouk Agnes, Deputy Director General, ALFI.

“As the RI market continues to develop in size and maturity; transparency, accuracy and trust remain critical requirements to progress and innovate. This trend goes along with a steady advancement of non-financial reporting and increasing demand for third-party assessments to prove sustainability commitments. Accordingly, LuxFLAG labels, which increase transparency and foster confidence, have encountered a 30%-growth rate in the last two years, gaining further traction among sustainability-oriented investors and asset managers in their pursuit of long-term success.” concludes Annemarie Arens, General Manager of LuxFLAG.

Download the document here.

**ENDS**

About the survey:

These statistics cover the European responsible investing fund market as at 31 December 2016, including the size of the market, investing categories and the domicile of such funds. This report focuses essentially on mutual funds domiciled in Europe. It does not address pension fund assets, segregated managed accounts or insurance company assets due to the relative difficulty of accurately measuring the size, nature and domicile of such assets. The source data comes from FundFile, a fund database owned by the Broadridge Financial Solutions, Inc. and has been computed by KPMG.

Updated on 18/05/17
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- Publications

The Association of the Luxembourg Fund Industry (ALFI) has published a set of Principles for the Oversight of Financial Intermediaries in Distribution of Funds, in line with its mission to help members capitalise on industry trends and to encourage professionalism, integrity and quality within the Luxembourg fund industry.

The document was published during ALFI’s recent Leading Edge conference which focused on the evolving role and responsibilities of investment fund management companies. The event attracted more than 230 fund industry practitioners, demonstrating high demand for further information on the subject.

Asset managers’ operating models have seen considerable changes in recent years. While ‘traditional’ management companies have developed in conjunction with the growth of the UCITS brand over the past 20 years, the introduction of the Alternative Investment Fund Managers Directive (AIFMD) has led to the emergence of so-called Super Management Companies (‘Super ManCos’) serving both UCITS and Alternative Investment Funds (AIF).

“A number of regulations have imposed additional responsibilities on management companies in recent years, mainly within management and governance and oversight”, says Marc-André Bechet, Director Legal & Tax at ALFI. “It was therefore time for representatives of management companies and of the Luxembourg fund industry to step back and take stock of best practices in that respect.”

Given Luxembourg’s unrivaled position as the leading centre for cross-border fund distribution, providing its members with a set of high-level common principles for the oversight of financial intermediaries in the fund distribution chain is a logical next step for ALFI.

The document covers key areas of financial intermediaries’ oversight: risk assessment of the distribution model, initial due diligence, ongoing due diligence/monitoring, governance of financial intermediaries, and reporting. The document takes a “principles" rather than “rules" based approach, in that it relies upon good judgment rather than prescription.

Download the document here (available to ALFI Members only).

Updated on 19/05/17
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- Press releases

The first edition of the ALFI European Asset Management (EAM) Conference took place in Luxembourg on March 21 and 22. The 600 participants from 25 countries very quickly recognised the event as THE place to be for international Asset Managers who wish to stay abreast of the most pressing issues currently facing the industry.

 

 


What is driving the Asset Management world today?

 

ALFI EAM conference - THE place to be for international Asset Managers

The first edition of the ALFI European Asset Management (EAM) Conference took place in Luxembourg on March 21 and 22. The 600 participants from 25 countries very quickly recognised the event as THE place to be for international Asset Managers who wish to stay abreast of the most pressing issues currently facing the industry.

Photo gallery.

Conference video report


 

 


Brexit: no room for supervisory competition

 

 

 

Brexit presents a problem for UK-based managers who passport their products across the EU27, and many are engaging with industry experts about how best to ensure continuity during this highly uncertain period. “The uncertainty around Brexit is driving change, and UK firms will need to assess where they locate their European business post-Brexit,” said Denise Voss, chairman of ALFI (photo on the left).

The Commission de Surveillance du Secteur Financier (CSSF), the financial services regulator in Luxembourg, said it expects firms to have substance in the country in order to keep their passporting rights. “Within the EU regulatory framework, there is requirement for substance and letterbox entities are unacceptable. At the CSSF, we are mindful that entities authorised and supervised in Luxembourg are fully compliant with their substance obligations. EU rules do allow firms to delegate activities, but if organisations do this, there must be clear monitoring and risk oversight,” said Jean-Marc Goy, counsel of international affairs at the CSSF.

 

 

Nonetheless, some believe certain jurisdictions are having a regulatory race to the bottom to attract market share, and this has been slapped down by the European Securities and Markets Authority (ESMA).

 “It is important for countries to make themselves look attractive for UK market participants but we cannot have a situation where there is regulatory and supervisory competition, as this could undermine cross-border standards and rules. This is an issue the ESMA board fully recognises,” said Steven Maijoor, Chair of ESMA (photo on the right).

 

 

 

 

What is the role of the Luxembourg financial sector in the context of Brexit?

 

 

Winning over the Millennials


Nearly all stakeholders in asset management are trying to identify ways in which to appeal to millennials, which applies to anyone born after 1980. Millennials may have a sophisticated grasp of technological innovation, but the industry is mindful that many young people lack such competency around financial literacy.

Danny Dolan, managing director at China Post Global, acknowledged that young people had insufficient information on critical issues concerning personal finance including mortgages, pensions and savings. He added it was critical the industry lobbied governments to bring about better education on such matters.

Others agreed. “Financial education is now part of the curriculum and increasingly so in the UK. If an individual buys a car, the dealership will provide a lot of information in a booklet, for example. Asset managers should do the same as many at present do not really put education tools on their websites,” said Amin Rajan, CEO at Create Research.

Is there a need for greater financial literacy?

 

 

This absence of financial knowledge is indicative in millennials’ return expectations. Courtney Waterman, head of EMEA marketing at Schroders, highlighted millennials typically had return expectations of 10.2% per annum compared to 8.4% for investors aged over 36. Given the current low interest rates, such return prospects look unrealistic. Fortunately, research by Schroders also found millennials to be very eager to learn about investing with 92% stating they wanted to better understand investments, compared to 75% of older investors.

What’s on the mind of the Investor? Investment outcomes: Not what you’d expect

 

 

The rise of ESG


Millennials and institutional investors are taking a keener interest in ESG

Even with limited disposable income, millennials are quite ethical about what they invest in. A number of studies have indicated that young people want their fund managers to incorporate environmental, social and governance (ESG) issues into their strategies.

Research by Schroders, found millennials were more likely to stick with a company which employed ESG, and would actively pull capital out of organisations whose ESG is found wanting. While some investors question the correlation between ESG and performance, 72% of allocators surveyed by Morgan Stanley felt companies with good ESG records can achieve higher profitability and are better long-term investments.

It is not just millennials taking a keener interest in ESG, but also institutional investors. “Asset management is becoming more equipped with ESG, and many institutional investors already make it a requirement for any capital allocation,” said Paul Carr, CEO and Conducting Officer at East Capital.


Technology, technology!


Major consequences for the asset management community globally

Fin-tech – whether it is robo-advisors or Blockchain – is going to have major consequences for the asset management community globally. Panellists recognised such technologies will have a positive impact in bringing about operational efficiencies to the funds’ industry, but also by enabling managers to attract younger, more technologically astute investors.

“Robo-advice is evolving and addressing the issue around a lack of advice in parts of the market. Younger, tech savvy investors are enthusiastic adopters of robo-advice. We have seen young people in China increasingly buy funds through WeChat,” said Dolan. A report by Citi highlighted that robo-advisers – despite managing zero assets in 2012 – had grown to $14 billion by 2014, and the bank expected this to reach $5 trillion in a decade.

However, there is still a strong belief that maintaining a human overlay in the fund selection process is critical. “I recognise that robo-advice is very important but it is also important to have human interaction once an investor has gone through the automated set-piece. There is a difference between actually making an investment and going through the questionnaire process,” commented Jeremy Soutter, global head of product development and management at Standard Life Investments (photo on the left).

Artificial Intelligence (AI) and machine learning also featured heavily, and there is obvious concern among stakeholders about what this technology means for back and middle office processes and jobs. The last eight years has seen a major increase in operational, legal and compliance roles at financial institutions, but it is precisely these professions that are vulnerable to AI. “One of the most crucial things the industry needs to do is to focus on human jobs at risk from AI, and identify ways in which we can incorporate them into the industry still,” said Voss.

 

      

 

Active vs Passive


Active managers are facing some chastening times. Passive funds are winning market share as investors seek low cost returns.

“Liquidity has been pumped into the markets by Central Banks and this has led to asset values being overinflated leading to disconnect between valuations and fundamentals. This is putting active managers in a tricky space as the normal rules of investing no longer apply,” said Rajan.

What do clients want from their asset managers?

 

 

The surging equity rally – amplified by expected increased infrastructure spending and a focused growth agenda in the US – has also assisted passive products, but markets are cyclical and active managers should not be disregarded. “The world is cyclical. In 1978, people predicted the death of equities yet beginning in 1981 marked the longest equity bull market recorded,” added Rajan. As such, many acknowledge the key to successful return generation is to create balanced portfolios comprising active, passive and alternatives.


To conclude...


Flexibility is key to the long-term success

The Luxembourg funds industry recognises clients are changing the way they allocate, whether that is through new technology, or a more principled approach to investing.

The industry is now tailoring to these needs, and progress is beginning to be made. This is all occurring against a backdrop of regulation and geopolitical change, which the asset management industry is approaching pragmatically and intelligently.


#ALFIEAM17 - ALFI European Asset Management conference on Twitter

 

 

 

 

 

 

 

Updated on 12/04/17
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- ALFI statements

ALFI's Investor Protection working group published the Issue 1 of the PRIIPs KID Q&A. This document contains the working group's answers to questions about the PRIIPs KID, which are written from a perspective of investment funds (UCITS and AIFs as PRIIPs, or where these funds form part of MOPs).The document is reserved to ALFI Members, to download it click here.

Updated on 31/05/17
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- Press releases

Le projet de loi 7024 modifiera l'article 41 de la loi du 5 avril 1993 relative au secteur financier et assouplira le secret professionnel afin de faciliter l’externalisation de services dans le secteur financier à l’intérieur d’un même groupe ou vers des prestataires externes.

Communiqué de presse ABBL/ALFI

Le projet de loi 7024 modifiera l'article 41 de la loi du 5 avril 1993 relative au secteur financier et assouplira le secret professionnel afin de faciliter l’externalisation de services dans le secteur financier à l’intérieur d’un même groupe ou vers des prestataires externes. L'ABBL et l'ALFI sont d'avis que cet assouplissement permettra de moderniser le cadre légal en matière de secret professionnel en l’adaptant à l’ère de la digitalisation, d’accompagner le développement de nouvelles activités en matière de “Fintech”, et encouragera ainsi des banques et d’autres nouveaux prestataires de services du monde financier à venir s’installer au Grand-Duché.

En effet, la révision de l'article 41 contribuera à l’évolution de la place financière en créant des opportunités pour les acteurs sur place et un lieu attractif pour les opérateurs à la recherche d'une nouvelle plateforme pour la distribution de leurs services en Europe. Cette révision permettra de répondre aux nécessités d'échange d’information, notamment entre les centres de compétences d'un même groupe, de supprimer des barrières technologiques et de réduire certains coûts induits par l'évolution réglementaire.

Pour toutes ces raisons, l'ABBL et l'ALFI, conscients des enjeux liés à cet assouplissement, soutiennent la réforme proposée, afin d’assurer l'avenir et la pérennité des activités et des acteurs de notre place financière et de rendre la place attractive pour de nouveaux acteurs.

Updated on 06/04/17
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- Videos

With more than 30 speakers from 12 countries and three continents, ALFI’s annual Impact Investing Conference on 26 April 2017 is the ideal platform to learn from and engage with founders and CEOs of impact ventures, wealth managers, institutional, private and social investors, fund promoters, advisors and service providers in the rapidly expanding field of impact investing.

This year’s conference will focus on Climate Finance and Social Development.
 
Join Luxembourg’s leading conference on impact investing and enjoy lively panel discussions, fascinating key-note addresses and captivating out of the box speeches about the most recent innovations, trends and opportunities in the impact investment field.

Programme & registration: click here

Updated on 30/03/17
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- ALFI statements

On 23 March 2017, ALFI responded to the European Supervisory Authorities’ consultation on PRIIPs with environmental or social objectives.

Download the response here.

Updated on 24/03/17
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- ALFI statements

On 17 March 2017, ALFI responded to the public consultation on Capital Markets Union Mid-Term Review 2017 issued by the European Commission in January this year. The results of this consultation will feed into the mid-term review of the Capital Markets Union Action Plan that the Commission aims to publish in June 2017. 

Download the ALFI response here.

 

Updated on 23/03/17
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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 the second edition of the compendium of Luxembourg laws and regulations on investment funds.

The compendium, which is available in English, French and German, is 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 new Law of 23 July 2016 on reserved alternative investment funds (RAIF), the amended Law of 13 February 2007 on specialised investment funds (SIF), 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 compendium has proved an invaluable tool for legal experts and practitioners dealing with Luxembourg collective investment vehicles. An update of the first edition was necessary because of two major regulatory developments in 2016 which were the transposition of UCITS V into the Luxembourg legislation and the adoption of the Law on reserved alternative investment funds, a new vehicle that is attracting much attention from asset managers.

These publications have been extremely useful to our members and to the international investment fund community, and I’m sure they will continue to be so”.

Robert Scharfe, Chief Executive Officer of the Luxembourg Stock Exchange, adds: “Investment funds are the second largest sector on the Luxembourg Stock Exchange, with more than 6,500 listings. As an international exchange serving a global base, we believe that 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 cooperated to select, consolidate and compile the legal and regulatory texts relevant to the different types of investment vehicles concerned. The two law firms also prepared the English and German translations.

The publications are available in French, English and German and can be downloaded at www.bourse.lu/fund-laws and at http://www.alfi.lu/publications-statements/legal-texts.

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

 

Updated on 23/03/17
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- ALFI statements

The Joint Committee of the European Supervisory Authorities (ESAs) has published a discussion paper for consultation regarding the potential benefits and risks of big data for consumers and financial firms in order to determine whether any further regulatory or supervisory actions may be needed.

The ESAs wish to understand what the big data phenomenon means for consumers, the financial industry and regulators. Existing EU legislation on data protection, competition and consumer protection, which shares the common goals of promoting economic growth, innovation and the welfare of individual consumers, are relevant for financial firms while not addressing big data issues explicitly.

The discussion paper asks whether the existing regulatory framework is sufficiently flexible to cover big data, has gaps which need to be filled and how it impacts the use of big data technologies.

A Q&A document provides clarifications on big data, its purpose and application in the financial sector.

Download the ALFI response here.

Updated on 20/03/17
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