Sector

Luxembourg’s parliament needs to make sure that its proposed update for the Grand Duchy’s law on investment funds will provide more clarity on how fund redemptions, and in particular suspensions, are to be treated by its national regulator CSSF, the country’s top advisory body has said.

Investment businesses positioning themselves for a future shaped by artificial intelligence should maintain their focus on where they want it to be in the long term. And they should not be alarmed by the massive job losses that will stem from AI adoption. The global economy will be supported by productivity gains that the AI revolution will bring, easing the impact of an ageing workforce.

In a significant market trend, European fund investors are increasingly redirecting their investments towards larger, passively managed mutual funds and ETFs, at the expense of actively managed smaller ones. This strategic shift has ignited a sustained downward pressure on costs across various fund types and strategies, according to the latest insights unveiled on Monday by the prominent European fund sector group Efama.

As global financial hub known for its robust banking and investment industry, Luxembourg is awaiting an upcoming discussion at the Financial Action Task Force (FATF) on its anti-money laundering (AML) measures. The FATF, the international body responsible for combating money laundering and terrorist financing, will discuss the findings of its latest mutual evaluation assessment of the grand duchy next week in Paris.

Ireland has cemented itself as the biggest international ETF domicile – leaving challengers such as Luxembourg having to play catch up. Some Dublin-based fund specialists, however, believe that Luxembourg is not entirely left without options.

Luxembourg banking association ABBL on Monday said it sees the EU’s new retail investment plans as “controversial”, warning that the package that aims to prioritise consumer interests and strengthen investor protection “may have unintended consequences” and could distort the investment sector.

Europe’s top financial regulators on Thursday presented a first official definition of greenwashing as part of a common approach for cracking down on greenwashing practices among banks, asset managers and insurance companies, turning up the pressure on an industry that has for a long time been complaining about the lack of clarity of the EU’s sustainable finance regulations.

According to a recent study conducted by Brussels-based NGO Better Finance and Germany’s DSW, reclaiming withholding tax in Europe remains an arduous and costly endeavor. The study, which surveyed 3,000 European investors, unveiled the considerable challenges faced by non-professional investors in reclaiming taxes paid twice on cross-border dividend income, making it financially impractical. The European Commission is poised to present proposals in June to alleviate obstacles and prevent double taxation.

Costs of investment funds continue to be a divisive topic in the fund and asset management business. Are investors really paying 40% too much? Or ‘only’ 25%? What are they actually paying for? In Luxembourg, home to a third of Europe’s 30,000 Ucits funds, this discussion could lead to major changes in the coming years, like it already has in the United Kingdom and the Netherlands.

When the long wait for the retail investment strategy finally ended on Wednesday at a European Commission press conference in Brussels, Commissioner Mairead McGuinness gave the financial industry three years to hit her targets for transparency, costs and retail investor participation, or an outright ban on kickbacks will be back on the table.