Stephen Evans

The potential shape of the upcoming reform of the Alternative Investment Fund Managers Directive (AIFMD) became clearer this summer. The 18 August letter from Esma to the European Commission gave some strong hints on the outlook for this key text for Luxembourg’s fund industry.

Recent moves by the UK and Luxembourg authorities regarding investment funds should allow business to continue mostly as normal despite Brexit, says Patrick Mischo, newly appointed Senior Partner of the law firm Allen & Overy in Luxembourg.

State Street Luxembourg seems to have ridden out the first wave of the coronavirus crisis. Yet what of the return to work and a potential secondary shock? We asked Eduardo Gramuglia Pallavicino, State Street Luxembourg’s country head.

‘It all worked quite well. The regulators were quite pragmatic, simplifying some of the processes and allowing workload to be balanced across locations,’ Mr Gramuglia Pallavicino said confidently. ‘These changes were necessary, as in March transaction volumes were double the norm.’

Annual general meetings moving online is an example of how the coronavirus could change the way businesses function. The Institut Luxembourgeois des Administrateurs (ILA), the country’s director’s association, saw a 20% increase in participation after moving their AGM online.

Despite the profound economic shock that continues to play out, investors in private assets appear to be quietly confident that this is a major but temporary setback. Two players in Luxembourg’s financial sector share this cautious optimism as they see investors taking a long-term view.

Contrary to the predictions of some that the pandemic will see a pull-back from globalisation, Jurgen Vanhoenacker, who heads the Sales and Wealth Structuring teams at Lombard International Assurance in Luxembourg, sees no signs of a reduced appetite for clients to live cross-border lives.

Investors need clear, comparable information to understand sustainable investing. A range of new EU standards and reporting rules aim to facilitate this, but implementation will be challenging with a tight deadline. This gives the Grand Duchy an opportunity to create a lucrative niche to help bring these regulations to life.

Liquidity in Luxembourg’s funds is a key concern for the CSSF, Luxembourg’s financial regulator. With all asset class crashing over the last month, investors have had no easy safe-haven options, and many have sought to sell up and hold cash. However, to date, this stress appears not to have led to the suspension of any Lux fund.

The opportunity of teleworking is one of few silver linings to the coronavirus crisis. Especially for the 25,000 cross-border workers in the financial sector, it has been a relief. Will they be willing to resume their tough daily journeys to work after the lockdown?

Equities – down. Fixed income – down. Precious metals – down. Commodities – down. These have been a strange, potentially frightening few weeks for all investors, including private bankers.