Raymond Frenken

The global market for Exchange Traded Funds, better known as ETFs, is projected to more than triple in the next ten years to reach 30 trillion dollars, says Brown Brothers Harriman in a new study it releases today. Developments in this market are closely watched in Luxembourg, Europe’s second-biggest hub for ETFs. ETFs are increasingly finding their way into institutional portfolios, concludes BBH in its annual survey of 325 institutional investors, financial advisors and fund managers from the US, Europe and China.

European private equity investors have become more cautious during recent weeks following the collapse of Silicon Valley Bank and Credit Suisse. Appetite for alternative investments however remains strong while some investors embrace the ‘dislocation’ in the market as an opportunity. “If you’re selective, you can even do better than expected.”

Luxembourg-headquartered Quintet Private Bank on Thursday posted its first net profit in four years as interest margins improved thanks to rising interest rates. Higher trading income and a one-time gain from the sale of its stake in EFA also underpinned its performance last year.

Luxembourg’s top supervisor for investment funds on Wednesday assured the country’s fund management community, describing the sector as “very robust” and speaking about “quite normal” levels of volatility, even though it is not fully immune to the liquidity issues that have rocked global financial markets in recent weeks.

Alfi’s European asset management conference on Tuesday caught up on the global debate about corporate taxation, something that will also affect large Luxembourg investment funds. At the heart of the complex discussion: BEPS Pillar Two and Transfer Pricing. 

“Some see it like building a plane while flying,” said Keith O’Donnell, managing partner at Atoz Tax Advisors. “Really big challenge. No tax authority has issued forms yet to allow firms to comply. It is very much a work in progress.”

The head of the European Securities and Markets Authority, which oversees and coordinates the work of European supervisors in asset management, on Tuesday called on the industry to pay more attention to the management of increasing interest rate risks and to step up its efforts in terms of “prudent management” of the investment funds.

Apps and online investment services have led to a new type of consumer behaviour. Bank runs go viral, introducing a new type of liquidity risk for banks and investment services. The ECB warns the threat may not be ignored.

After 300 basis points in six subsequent rate hikes since last July, the European Central Bank on Thursday stopped talking about further increases in eurozone interest rates. The ECB is unsure about its next steps now the effects of higher rates are being felt by businesses, households and banks. It also sees that its policy is transmitting “rather rapidly” into the economy. 

Luxembourg-domiciled Ucits investment funds for retail investors have become the most widely used funds in the Belgian market, the head of Belgian asset management association Beama said on Wednesday.

Now that the initial dust on SVB’s collapse has settled, one of Europe’s top bank supervisors has a clear message for investors, bankers and financial market participants: banks in Luxembourg and elsewhere in Europe are safe and sound thanks to stringent supervision. “If rates were to still increase, our banks would not sustain losses up to a level that would put their solvency into question,” said Claude Wampach, who serves as director of banking supervision at Luxembourg’s financial regulator CSSF, speaking to Investment Officer.