Raymond Frenken

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.

Fund managers across Europe can opt for a label to certify their investment product does what it says it does. The Luxembourg Finance Labelling Agency, also known as Luxflag, has certified some 365 funds, mostly with an ESG label. Luxflag chair Denise Voss spoke to InvestmentOfficer.lu for a podcast.

“A label is about certifying or giving clarity to investors, that what they invest in, is what it says on the tin. We’re actually not saying you must invest in this or that,” said Voss. 

Luxembourg’s financial supervisor CSSF on Thursday acknowledged that there is ‘some’ room for improving its international cooperation with other supervisors after a peer review conducted by the EU’s securities markets authority found a number of shortcomings in the supervision of financial institutions that provide cross-border services to retail clients under the European passporting system.

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. 

In the Luxembourg transfer market, Banque de Luxembourg Investments and JP Morgan Asset Management both announced that they have strengthened their sustainable investing teams. Consultancy EY meanwhile said it has created a new Luxembourg team dedicated to the public sector.

Roland Rott and Soňa Stadtelmeyer-Petru (pictured) have joined JP Morgan’s sustainable investing team. Both hires will report to JPM’s Global Head of Sustainable Investing, Jennifer Wu.

An abrupt and disorderly transition to a low carbon economy risks disrupting the financial system as a sudden implementation of climate change mitigation policies can increase transition risks, a new European Central Bank study said on Friday.

The ECB’s researchers raised the prospect of “severe banking system losses” if no additional policy action is taken. These losses could reach “up to 40 percent more” compared to a baseline scenario where no policy action is taken.

The European Central Bank on Thursday opened the doors to a potential eurozone rate hike in the second half of this year as it brought forward the end of its asset purchasing programme to the summer, but at the same time it made clear that it would keep open its option to renew the programme if economic conditions worsen because of the war in Ukraine and sanctions against Russia.

The future of some 855 funds with exposure to Russia is shrouded in uncertainty as the turmoil in Russia’s financial markets continued on Monday. JP Morgan AM and Prosperity on Monday suspended their funds with assets in Russia. East Capital warned of “a very high level of disruption”. Asset managers are facing requests for information from their regulators.