Sector

Outsourcing, kickback fees, alternative investments, ESG challenges and competition with Ireland were among the topics of the most popular columns published on Investment Officer Luxembourg in 2023.

This year’s overview of the most read articles on Investment Officer Luxembourg demonstrates that readers are highly attracted to articles about financial regulation and supervision of investment funds and management companies in the Grand Duchy.

A recent update of a Luxembourg sustainable finance report notes that two-thirds of the assets under management of Luxembourg UCITS – 2.8 trillion euros at the end of June 2023 – report under one of the two designations set out by European rules for green investing. However, mention of investment-related greenwashing is conspicuous by its relative absence in the report.

Luxembourg last year remained among the most expensive domiciles for investment funds in Europe in all three investment categories, according to a research report released on Monday by the European Securities and Markets Authority, Esma.

Ireland has joined Luxembourg on a supervisory drive to push the financial industry to improve their asset valuation processes for investment funds. 

The Central Bank of Ireland has given fund managers in Dublin until the end of the second quarter next year to complete reviewing and upgrading where necessary their internal governance for fund valuations. A letter to the industry, published on Thursday, has defined four action points that need to be addressed at Board level.

The European Council and the European Parliament on Thursday reached a preliminary agreement on a new European directive mandating corporate social responsibility for large companies, but that will, following lobby pressure, exclude the financial sector.

Political pressure is mounting on the Securities and Exchange Commission (SEC) over its efforts on climate reporting and Environmental, Social, and Governance (ESG). With the recent delay in final regulations, the question arises: Is the SEC bowing to pressure from critics?

Luxembourg’s financial markets authority CSSF has given fund management companies until the end of this year to review the way they determine the value of their investment funds. Investment Officer recently spoke to Marco Zwick, the CSSF director in charge of supervising investment funds. “We noted some room for improvement,” he said.

Will fund managers soon be retiring as artificial intelligence becomes increasingly prevalent and consistently outperforms the market? Or is this notion exaggerated? Investment Officer spoke to Thomas Dierckx, a financial machine learning expert at Kairon Labs.

The European Securities and Markets Authority, Esma, on Thursday issued a warning about practices surrounding Collateralised Loan Obligations (CLOs) in the EU. The supervisory body has found potential conflicts of interest and undue influence in the CLO rating process during the 2017-2021 period.

The Big Three credit rating agencies - Fitch Ratings, Moody’s and S&P - are at the centre of this review.