News

Luxembourg is heading to the polls on Sunday. The outcome is anticipated to reaffirm the Grand Duchy’s status as an international financial centre rooted in political stability. Two issues, however, stand out: talents and taxes.

The 29th edition of the Monterey Insight Luxembourg Fund Report reveals that unregulated funds are outperforming their regulated counterparts in a big way, signalling a potential paradigm shift for the Grand Duchy. Unregulated funds, especially reserved alternative investment funds (Raifs), have seen a surge in asset value. Raifs alone have increased their assets to the equivalent of 458.4 billion dollars, marking a 38.6% rise from last year’s 330.8 billion dollars, said Monterey.

Performance of Bridgewater Associates’ flagship Pure Alpha Fund falls short, raising speculation that the hedge fund’s founder, Ray Dalio, may come out of retirement to regain control, much to the dismay of the new CEO.

Although Dalio retired in 2022, he retained the contractual right to take back control of Bridgewater Associates, the world’s largest hedge fund, if its performance lags.

Natural disasters can have a severe impact on the real estate market, yet investors appear unaware of this looming risk. A correction in real estate stocks seems to be lurking.

Portfolio manager Lucas Vuurmans of Amsterdam-based investment bank Van Lanschot Kempen discussed this with InvestmentOfficer.nl. For the U.S. office market, a correction is anticipated due to climate risks averaging more than 3 percent. In riskier areas, the decline in value could even reach 10 to 12 percent.

In the wake of a sturdy first half characterised by ebbing inflation, stellar tech-driven stock market performance, and soaring bond yields, economists and investment strategists predict a reduced recession risk for the latter half of 2023, a survey by Natixis Investment Managers shows. “Recession is still a real possibility, but most expect a softer landing,” said Mabrouk Chetouane, head of global market strategy at Natixis IM.

Cyprus has emerged as the primary location for firms offering cross-border investment services to retail clients in the European Union and European Economic Area, accounting for 23 percent of the total firms providing passported services. Luxembourg and Germany followed closely, representing 16 percent and 13 percent of all firms, respectively, according to an analysis conducted by European Securities and Markets Authority (Esma) and national competent authorities (NCAs).

The number of new reserved alternative investment funds registered in Luxembourg during a single month in June showed its first rebound since January. Issuance levels though are well below their historic averages. Economic and geopolitical issues get the blame, along with difficulties in raising institutional investment money. Still, faith in the vehicle remains strong, with private equity specialists expecting a further recovery in Raif registrations.

Nicolas Mackel, the CEO of the Luxembourg for Finance development agency Luxembourg for Finance and considered as the de facto ambassador of Luxembourg’s financial sector, speaks to Investment Officer’s Raymond Frenken in this IO Talks podcast.

Hopes in the commercial real estate sector that central banks would lower interest rates due to declining inflation have been dashed. Interest rates are staying high for longer, causing problems, particularly for those who borrowed heavily during the market boom to fuel growth and who now face the burden of refinancing their debt.

The association representing Luxembourg’s banking industry has claimed success in its lobbying effort to persuade the EU to amend the rules governing the prudential requirements and the supervision of third-country branches to its satisfaction. The association said Thursday that a series of subsequent amendments preserve the attractiveness of the EU as a financial centre towards the rest of the world.