Tjibbe Hoekstra

All of Luxembourg’s fund community is feeling the impact of the coronavirus crisis, and fund association Alfi is doing its best to offer support. At the same time however, Alfi itself is being hit by the crisis too, as part of its revenue stream partly drying up.

Alfi postponed its flagship European Asset Management Conference, due to take place on 17-18 March this year, to mid-September. There are another dozen or so events on its calendar for this year, some of  which may have to be cancelled depending on the coronavirus situation. 

The earnings season has started in Europe. But it’s a rather strange one. ‘All companies have stopped issuing guidance,’ observes Gilles Guibout, head of European shares at AXA IM. ‘That makes it difficult for bottom-up investors. So more than ever, we need a top-down approach now.’

Despite a Brexit-inspired influx of banks to Luxembourg, the number of banks active in the country is dwindling. At the same time however, many of the remaining banks keep growing their revenue thanks to an increasing focus on ultra-high net worth individuals (UNHWI’s). But this success comes with a price.

ETFs have remained open for business during the coronacrisis, while credit markets were largely frozen. But ETFs were still able to cope with unprecedented outflows, providing investors with badly needed liquidity. However, this may just be a Pyrrhus victory for the index providers.

The coronacrisis has hit the real estate sector hard. Much of the damage could prove to be permanent, as underlying trends are now accelerating and consumer behaviour could change permanently, says Michael Gobitschek, manager of the Skagen M2 fund.

‘Will we still travel as much as before the virus outbreak In two years’ time, for example? And we may be working from home a lot more’, Gobitschek asks.

Fund managers expect more companies to cut their dividends, following the example set by banks. However, many companies still are perfectly capable of maintaining their dividends, according to DPAM’s Laurent van Tuyckom.

Following Christine Lagarde’s earlier ‘rookie error’, the newest ECB stimulus package did not come as a surprise for Ella Hoxha, manager of the Pictet Global Bond Fund. Are European bonds now out of the danger zone? ‘The worst should technically be behind us though we’re not out of this crisis yet. The recession hasn’t even begun.’

The proposals by the Technical Expert Group (TEG) for sustainable benchmarks and ESG disclosure will not lead to an increase in investments in the climate transition, says index provider Scientific Beta in a vicious 60-page rebuke of the TEG’s final report, which was published in autumn last year.

Some 60 financial firms have announced relocations of activities to Luxembourg since the referendum in 2016. The final number will probably top 75 firms, as some have not yet made their plans public, Luxembourg for Finance CEO Nicolas Mackel said in an interview with Investment Officer.

Between 2016 and 2020, China spent more than 5.5bn renminbi (715bn euros) on environmental investments. But these massive sums of money are yet to translate into interesting investment opportunities in the country. Fund manager Yi Du of Pictet Global Environmental Opportunities (GEO) explains why this is the case.