Asset Managers

Luxembourg is discussing the innovative use of a particular liquidity management tool known as “side pockets” in order to deal with the suspensions of investment funds with significant exposure to Russia.

The head of Luxembourg’s top financial regulator on Tuesday called on the country’s asset management industry to step up its efforts and make sure that Russian oligarchs don’t evade sanctions by hiding their money in European investment funds.

M&G Investments is preparing to transform its Luxembourg hub for further growth in Europe with the objective of generating half of total group revenue within the next few years, its managing director Micaela Forelli told Investment Officer Luxembourg.

It almost sounds like a call to run for the hills. Get rid of your risky assets, go defensive, and play volatility as an asset class. Sell European equities and buy Swiss. Now that the Russia-Ukraine war shows no signs of abating, Christophe Donay, Chief Strategist at Swiss-based Pictet Wealth Management, fears that excessive global debt has made the world economy vulnerable to a new systemic crisis. 

There are a number of important events expected this week that will affect investors. The most important is undoubtedly the decision of the Federal Open Market Committee (FOMC) on US interest rates on Wednesday.

Impact investing looks to put investment money to work on bringing about measurable change in the poorer societies of the emerging and frontier markets as well as improving the environment. With the successive shocks of Covid and now the Russian invasion of Ukraine rocking Europe and the West, Philipp Mueller, the CEO of BlueOrchard explains that the residents of countries in its markets can provide inspiration for our wealthier society. The key word: resilience. 

For a second time in two years, investment fund managers have been ordered to directly report significant redemptions as the CSSF, the Grand Duchy’s financial supervisor, stepped up its monitoring of the impact from the war in Ukraine and the international sanctions against Russia.

The financial industry often baulked at the tens of billions of euros it pays for EU’s comprehensive regulation framework put in place post 2008 financial crisis. With markets in turmoil over Russia-Ukraine, that tone now is different.

While the plunge in the Ark Innovation ETF, a once-popular technology fund with about 50 billion dollars in assets, has made some investors question the fund’s strategy, Ark’s long-revered manager Cathie Wood made clear on Monday that she has not lost her faith in the power of innovation.

Also as international funds hub, Luxembourg finds itself exposed to the economic fallout from Russia’s war against Ukraine. Hundreds of investment funds with assets in Russia’s financial markets are making extra efforts to keep clients abreast about the financial impact of international sanctions. Dozens of funds have already been suspended and from Wednesday, European stock exchanges have banned all trade in Russian securities.