By Camille Thommes, ALFI Director General
Each year, when we at ALFI look back over the reporting period for the ALFI Annual Report, we do so with the benefit of hindsight – of course, you may think, as this is the nature of reporting. However, this is the third twelve-month period in a row that I reflect on and cannot help but notice that things turned out rather differently than anyone had thought.
Even only a few months ago, economists would have been forgiven for seeing light at the end of the tunnel, as we seemed to be nearing the end of the pandemic. 2021 figures were encouraging, with AuM in the Grand Duchy at EUR 5.9 trillion, an all-time high. This corresponds to a year-on-year increase of 17.8%, or EUR 886 billion. More importantly, we observed net flows at record-breaking level, in excess of 30 billion per month.
Half a year has passed since, and we have had to face the terrible reality of war in Ukraine. Despite our shock and concern, we seemed to remain limited in our course of action. Arguably our main foothold, the best tool for us as finance professionals, for this war or any other conflict, is that we do not finance it. And sanctions can work. In our industry, the nature of investment funds means that following sanctions rules can require complicated mechanisms. At ALFI, we want to make sure our members can stay on top of sometimes rapid developments. When the war began, we quickly established a contact channel for crisis-related questions. We have been helping to direct information, in our role as the interface between government and the supervisory authority on the one hand and industry players on the other. We are in regular contact with the CSSF to discuss operational and regulatory challenges and possible solutions. We want to contribute to the efficiency and reactivity that makes Luxembourg a reliable fund hub, even during unstable times. In the above instance, we managed to focus on our strengths: leveraging existing networks and reinforcing cooperative efforts. This allowed us to create elements of reliability amidst uncertainty and was testament to ALFI’s key role as the face and voice of the industry, for the benefit of our members, for investors and the asset management industry as a whole.
What has remained largely unchanged are the big themes that affect the fund industry. Volatile markets, rising inflation, a worrying pensions gap, and the cost of modernising to meet the need for digitally transformed, sustainably managed businesses are some of the challenges that we have to overcome together. They are among the many challenges that we share across Europe, and the Capital Markets Union initiative is now well underway to address most of them.
All these topics are regularly addressed at ALFI conferences and roadshows, which have taken place over the past twelve months in a variety of formats. Industry developments are also being monitored by the many ALFI technical committees and forums. Their tireless work has made it possible for ALFI to respond to 37 consultations over the reporting period, and to publish 22 ALFI documents ranging from Q&A and guidelines to surveys and other brochures. These ALFI publications and consultation responses are a keystone in providing ALFI members with practical guidance and giving our industry a collective voice. I would like to express my gratitude to all the working group members who put in time and effort to share their expertise to make this possible. I also thank the ALFI staff, who – usually in the background – each have a hand in achieving our association’s mission every day.