The ALFI European Alternative Investment Funds Conference (EAIF) is taking place at the European Convention Centre in Luxembourg-Kirchberg on Tuesday 22 and Wedneday 23 November 2016.
The event attracted 600+ attendees, many from outside the Grand Duchy, to participate in two days of panel discussions, stand-alone presentations and dedicated workshops on hedge funds, private equity funds and real estate funds, highlighting the latest news and trends in the alternative investment fund space.
On Tuesday at midday, ALFI held a press conference to present an update on the alternative investment fund industry in Luxembourg.
Denise Voss, Chairman of ALFI, presented a number of statistics demonstrating the evolution of Luxembourg as an investment fund centre since its beginnings. She explained that there are currently a record €3,602 billion assets under management in Luxembourg, with €67 billion in net sales. UCITS account for €3,033 billion, with alternative funds topping €568 billion, representing circa 15% of total assets under management.
There are 235 alternative investment fund managers authorised, with 605 registered. Luxembourg currently has a 36% share of the world-wide UCITS market, and 10.5% of alternative investment funds. She mentioned about the RAIF that came into effect in July this year and confirmed that 16 RAIFs are now registered in Luxembourg.
She referred to an old report that showed that Luxembourg is a recognised fund domicile; ALFI wants to update this study, especially in real estate and private equity.
Given the number of alternative investment funds and alternative investment managers in Luxembourg, she stressed that the Grand Duchy is no longer just for UCITS.
She stated "This positive news is in spite of the volatility and turbulent times we have seen in 2016, inspired in part by geopolitical events such as Brexit and the epic US presidential elections. The low to zero interest rate environment in Europe and in other parts of the world continue to weigh heavily on institutional and retail investors alike with the search for yield, while limiting risk, a difficult challenge for investors in Europe and elsewhere."
Claude Niedner, Chairman of the ALFI Alternative Investments Committee, talked about AIFMD regulating the fund manager, not the funds themselves. He said that the toolbox that was created back in 2013 at the time of the AIFMD regulation, has made Luxembourg very attractive, and that more than 1,000 collaborations have been established as a direct result.
He talked about the various asset classes, including real estate, hedge funds and private equity, etc., and stated that Luxembourg is recognised as the international onshore jurisdiction and offers flexibilitity in structures as well as fund labelling. It is now a jurisdiction of choice in the alternative investment space.
Camille Thommes, General Director of ALFI, gave an insight into what ALFI is planning over the next few months. Apart from AIFMD there are a number of roadshow trips arranged, including to Asia. In 2017 they will return to Latin America and South America; in Chile, local pension funds, for example, are now allowed to invest in alternative investments.
Chile, Peru and Colombia are important markets for Luxembourg's UCITS products. There have also been interesting developments in Brazil where regulations have changed, allowing institutional investors and high net worth individuals being allowed to diversify their investments and increase their percentage holdings in international securities. In Mexico, there are changes that look promising, yet these markets need a medium- to long-term view. ALFI undertook training courses in Brazil last year and held dialogue with the regulators in Mexico and other jurisdictions.
ALFI is planning two trips to the US as well as to London, Switzerland and Frankfurt. ALFI is also looking to see how it could re-structure its events in Luxembourg, examining its relevance going forward. They also undertake lobbying activities and producing various reports.
Regarding Brexit, ALFI will continue to support UK funds which represent circa 17% of fund assets here (€600m). There is a growing interest from UK-based asset managers regarding activities in Luxembourg in the future due to the current uncertaintly surrounding Brexit and what will happen. Luxembourg's AAA rating and its brand recognition are major selling points in this regard. He expects decisions to be made sooner rather than later, following MNG's recent announcement to set up a UCITS platform here, and reactions from legal and tax advisors in the Grand Duchy. He stressed that the mood is positive and the CSSF has confirmed that it is open for discussion with interested organisations. Many of these organisations may already have a Luxembourg presence, but currently just in UCITS and not necessarily in alternative funds, with distibution passports, etc., not yet in place here. An increase in the number of applications for AIFM licences is expected; Luxembourg could then be used as a gateway to the European market.
In this same regard, a trip is planned by ALFI to Asia in December to meet with some fund managers currently operating out of London, to present what Luxembourg has to offer. And a trip to Melbourne and Sydney in Australia is being planned for early March to meet with Australian institutional investors who are looking to invest in Luxembourg-domiciled funds, following the recent agreement between the two countries.
