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