Asset Managers

It has been a dire and highly volatile stock market year so far. The opportunity for active investors to make a difference and outsmart the market. Fine words notwithstanding, more than three quarters of active managers have failed again this year. “The biggest cause of active funds’ failure is their inability to survive.”

This is according to the latest Morningstar European Active/Passive Barometer, a semi-annual report that compares the performance of European-based active funds with passive funds in their respective Morningstar categories.

Luxembourg’s government is proposing to simplify the corporate income tax process for investment funds which have overseas investors or subsidiaries by reducing their risk of being subjected to full Luxembourg anti-tax avoidance corporation tax. The changes to the “reverse hybrid rule” seek to remove doubt from how to deal with tax exempt entities.

Fund investors clearly lack faith in UK companies. There has been a net outflow from funds investing in UK equities over the past three years, with the €21 billion of outflows over the first three quarters of 2022 already setting a record. UK dividend stocks are being relatively spared by investors, but small-cap stocks, often more focused on the local economy, are being sold off in particular.

Chances of a real turn in short-term interest rate policy seem to have been squandered since yesterday. According to specialists at Aegon AM, PGIM and T. Rowe Price, interest rates will remain high for several more quarters. A quick reversal in interest rate policy is unlikely. So is an early return to “normal” .

While equities will remain a dominant feature of sustainable investment portfolios, multi-asset and alternative strategies are expected to gain ground in the coming years. A new survey conducted among European investors shows that they expect their allocation to equities will decrease by two percent over the next five years, while their allocation to multi-asset and alternative funds will rise by two percent.

Stefano Amato has joined M&G Investments as a senior fund manager in the multi asset team. Amato, who joins from Santander, will co-manage the 1.1 billion euro M&G (Lux)  Income Allocation Fund alongside Steven Andrew to whom he will report. 

Dutch investment bank Kempen Capital Management has reclassified three of its sustainability funds to “light green” from “dark green/most sustainable” ahead of increasingly stringent requirements that will take effect from 2023 under the EU’s Sustainable Finance Disclosure Regulation, known as the SFDR.

The European Union has reached a political agreement that brings the relaunch of European long-term investment funds, a type of investment vehicle known as Eltif, one step closer. The European marketing passports for Eltifs are regarded as a major business opportunity for Luxembourg firms. 

Driven by new technologies, consumer expectations and risks, banks are increasingly forced to think and act differently, The boldness with which they embrace change in the time ahead will determine which scenario unfolds between now and 2035. “Massive changes are on the horizon.”

Orcadia Asset Management, active in the Benelux and France, has surpassed the 1.1 billion euro mark in assets under management. This allows the asset manager to operate profitably from Luxembourg. “Mergers and acquisitions in the Belgian landscape only make sense if there is a cultural match.”