Denise Voss, Chairman of ALFI - Association of the Luxembourg Fund Industry - portrays the fund industry landscape in Luxembourg, and how ALFI develops new ideas. Interview.

 

How important is the Luxembourg fund industry for the economy in the Grand Duchy?

The Luxembourg fund industry has seen growth in assets under management of over 6% through August 2017, which is quite positive. This increase clearly demonstrates the confidence that asset managers and fund initiators have in our fund centre and strenghthens Luxembourg’s position as Europe’s top domicile for investment funds distributed globally. The increase of net assets has a direct positive impact on the Luxembourg Government’s tax revenues since the Luxembourg domiciled funds are subject to a subscription tax that is calculated on their net assets under management. This makes that - according to latest data available – the fund industry generates 10% of the fiscal revenues. Further to this, the sector employs around 14 000 people and represents 8% of the GDP. It's not an exaggeration to say that the asset management industry plays a key role in the Luxembourg economy. In more general terms, the financial sector as a whole represents a 27% share of the Luxembourg economy, a proportion that is much higher than in Europe who is at an average of 5%.

 

« The sector employs around 14 000 people and represents 8% of the GDP. »

 

Which risks and opportunities do you currently identify for the Luxembourg Funds Industry?

Geopolitical events such as negotiations around Brexit and the US political situation bring uncertainty, to investors and to fund industry actors, and this is one of the challenges we have to address. Demographics is also another theme of interest for us. As the baby boomer generation retires and life expectancy continues to improve, public sector pension liabilities will grow and the younger generations will become more and more responsible for their own financial well-being, including for retirement. This brings me to a related and long standing challenge: investor education. We need to explain better and to more and more people why investing is important for their financial security. In this context, a driver for the fund industry is the Capital Markets Union (CMU), which highlights the role of capital markets in financing growth and creating jobs. CMU features several themes, including encouraging people to save more for their retirement, enabling greater cross-border distribution of funds and fighting against protectionism.  In the context of CMU, investment funds help governments finance public infrastructure and provide companies with access to capital, to grow their business and add jobs. ALFI has been engaged in many of the CMU related projects from the beginning and continues to have an active contribution to its major themes.

 

You have modernized the Alfi conferences in 2017. Which actions did you take and what is coming next??

ALFI events evolved this year in order to add even more value to participants, bring in more pertinent themes and respond to the industry’s evolving needs. Our “Spring Conference”, which in the recent past necessarily focused on regulatory issues, has become “The ALFI European Asset Management Conference”, putting asset managers and investors center-stage and giving them a forum to debate strategic issues, innovation in operations, asset allocation developments and new fund products. This year’s edition of the ALFI Global Distribution Conference gathered more distributors than ever before to discuss market opportunities for investment funds around the world and introduced the Distribution Achievement Awards presented by MackayWilliams, an independent mutual fund market analysis and research company. Given the high level of interest in Private Equity and Real Estate strategies that we have seen in past years, the traditional ALFI European Alternative Investment Fund Conference has evolved into the ALFI Private Equity and Real Estate Conference, which will be held on 21 and 22 November at the European Convention Centre in Luxembourg. The conference is principally aimed at experts and practitioners, but will also cater for specialised service providers. Other alternative asset classes, such as hedge funds, will be addressed during a pre-event seminar on 20 November at the BCEE premises. As for the future, in our efforts to promote the Luxembourg investment fund industry, we will continue to tour the globe and organise roadshows in Asia, US, Latin America, including a return trip to South Africa in 2018, in which we are seeing increased interest for both in and outbound business in the fund industry.