• FSO Alert: Commission proposes Directive on institutional long-term shareholder engagement

    In April 2014, the European Commission proposed a Directive on the encouragement of long-term shareholder engagement by institutional investors and asset managers, and on elements of listed companies’ corporate governance practice, including remuneration.

  • Actively managed products to drive growth

    Our Global regulated funds survey 2014 finds optimism among asset managers and opportunities for those who align their interests with client needs.

  • Global wealth and asset management industry outlook

    In this report we look at the global wealth and asset management industry from the inception of the global financial crisis though today.

  • Valuation on the radar

    Alternative asset managers are increasingly facing opportunites, challenges and constraints in the light of rising regulations such as the AIFMD.

  • FSO Alert: European Parliament endorses MiFID II package

    On 15 April 2014, the European Parliament voted to endorse the upgrade of the Markets in Financial Instruments Directive (MiFID II). Under MiFID II, financial services firms, including banks and investment firms, need to rethink their product governance, distribution and financial markets activities.

  • FSO Alert: PRIIPs KID endorsed by European Parliament

    On 1 April 2014, the European institutions reached an agreement on the Key Information Document (KID) which must be given to retail investors before they invest in packaged investment products. The KID represents a significant challenge for both product manufacturers and distributors, including banks, investment firms, insurance undertakings and asset managers.

  • FSO Alert: EU to regulate securities financing transactions - Repos, securities lending and rehypothecation

    In January 2014, the European Commission issued a Proposal for a Regulation on reporting and transparency of securities financing transactions (SFTs). The proposed regulation lays down EMIR-like rules on the reporting of SFTs to trade repositories, additional transparency requirements the use of SFTs by investment funds, and minimum conditions to be met when financial instruments are rehypothecated.

  • FSO Alert: ESMA revises UCITS collateral diversification rules

    In March 2014, the European Securities and Markets Authority (ESMA) issued its Report entitled Revision of the provisions on diversification of collateral in ESMA’s Guidelines on ETFs and other UCITS issues. The report introduces more flexible rules on the diversification of collateral received in the context of over-the-counter (OTC) financial derivatives transactions and efficient portfolio management (EPM) techniques.

  • Eurozone Forecast: Outlook for Financial Services – Spring 2014

    Our Spring Outlook for Financial Services forecast looks at what the latest financial developments mean for the region's banks, asset managers and insurers. Learn more.

Asset management: achieving a competitive advantage

Today’s asset management industry is marked by increased competition, heightened regulatory scrutiny and growing customer demands for more information and greater transparency – all set against the backdrop of a volatile market. As firms grapple with business issues such as product innovation, evolving fee structures and industry consolidation, they also find themselves needing to devote more time than ever to managing regulatory demands.

Luxembourg provides solutions to many of today’s challenges faced by the asset management industry. With over US$3 trillion of assets in investment funds, covering both traditional and all alternative asset classes, Luxembourg is the largest international investment fund domicile in the World and the leading cross-border distribution hub for investment funds.

EY can assist you to set up in Luxembourg, enhance your current product range and operating model, and face issues that affect the asset management industry:


  • Luxembourg UCITS

    The UCITS (Undertaking for Collective Investment in Transferable Securities) is the globally recognized brand for retail investment funds, such as equity, bond, money market and mixed funds, as well as funds of funds.

    With over US$2.5 trillion of assets in UCITS investment funds, Luxembourg is the No. 1 global center and distribution hub for UCITS.

    UCITS can be distributed relatively easy to all investors – both retail and all types of institutional investors – in key distribution markets across Asia, Latin America, Europe and the Middle East.

    Current and future developments impact UCITS, management companies, and service providers include:

    • UCITS V
    • UCITS VI
    • European guidelines on exchange traded funds (ETFs) and other UCITS issues
    • Luxembourg’s provisions on management company “substance”

    Read more:

  • Alternative Investment Fund Managers – AIFM

    In 2013, a new regime will be implemented across the European Union (EU), regulating the managers of alternative investment funds (AIF) – i.e., investment funds that do not classify as UCITS. The objectives of the Alternative Investment Fund Managers Directive (AIFMD) include enhancing investor protection, increasing transparency for investors and regulators, and better managing systemic risks related to alternative funds.

    Authorized AIFM will benefit from a passport to market the AIF they manage to professional investors throughout the EU, similar to the passport for the marketing of UCITS to retail investors. The AIFM regime is expected to create a global “AIF brand” comparable to the UCITS brand. Luxembourg is well positioned to “replicate” the Luxembourg UCITS success story for the distribution of alternative funds, benefiting from its reputation and expertise as a hub for UCITS products.

    While the main focus of the AIFMD is on managers of alternative funds, the AIFMD will not only impact EU and non-EU AIFM, but also EU and non-EU domiciled Alternative Investment Funds (AIF), service providers to these funds and their investors.

    The AIFMD has ramifications far beyond achieving basic compliance:

    • Alternative investment groups (including promoters, sponsors, advisers, general partners and managers of all types of non-UCITS funds) should conduct a strategic review of their fund ranges and their operating models
    • Service providers, especially depositaries, custodians, administrators and valuers, will also need to assess the strategic impact on their service offering and operating model and consider how they will react to new obligations and risks introduced by the AIFMD
    • Investors will need to consider the accessibility of products, and the AIFMD’s impact on their investment process

    Read more:

  • The Luxembourg Specialized Investment Fund − SIF

    The Specialized Investment Fund (SIF) is Luxembourg’s leading alternative investment fund (AIF) investment fund vehicle. The SIF regime has been used extensively to launch all types of AIF products including hedge funds, private equity funds, real estate funds, commodities funds, thematic funds investing in specific segments (such a microfinance or the environment) or exotic assets (tangible such a luxury goods and intangible such as intellectual property), as well as traditional funds primarily for non-retail distribution.

    The SIF regime may be used to create funds with different characteristics, such as multiple compartments (sub-funds), multiple share classes, direct and indirect funds, funds of funds, master-feeder structures, exchange traded products and structured products.

    SIFs enjoy more flexibility than UCITS, especially in terms of eligible investments and structuring. SIFs may be offered to a wide range of eligible, well informed investors.

    The Alternative Investment Fund Managers (AIFM) Directive will further boost its use significantly over the coming years.

    Read more:

  • The wider asset management agenda

    Faced with a difficult economic environment, evolving needs of investors and distributors, an overwhelming regulatory and tax agenda, increased demands for robust governance and internal control and transparency, leading asset management industry groups are thinking beyond compliance and operations.

    The asset management industry is responding to these challenges and opportunities by:

    • Enhancing product ranges and product distribution
    • Streamlining operating models (e.g., consolidation, cross-border servicing)
    • Enhancing governance models
    • Reviewing delegation arrangements
    • Adopting a structured approach to managing regulation

    Read more:

  • Why Luxembourg for investment funds?

    Luxembourg is the leading global location for all types of investment funds.

    The success of Luxembourg in attracting investment funds, and becoming a major financial center, may be attributed to a number of factors such as:

    • Reputation of the Luxembourg brand in the investment fund industry
    • Attractive range of investment fund solutions
    • Regulatory environment including accessibility, knowledge and responsiveness of the regulator
    • Stability and certainty:
      • Political, economic and social environment
      • Legal environment and taxation regime
    • Ability to achieve tax neutrality for products by considering direct and indirect taxation implications at fund and investor levels
    • Operational factors such as relocation costs, local infrastructure, and the qualifications and knowledge of the multicultural, multilingual international workforce
    • Service provider considerations such as their expertise and ability to meet specific local distribution market requirements from Luxembourg
    • Central location at the heart of Europe with easy access to other financial centers

    Read more:

  • Global Fund Distribution

    UCITS can be marketed to all types of investors in most key distribution markets. The UCITS brand is recognized worldwide.

    A comparable global brand for the marketing of AIF is expected to emerge following the implementation of the AIFM Directive.

    UCITS and AIF benefit from a "passport" enabling them to be marketed to investors across Europe. Marketing outside Europe is subject to the national regimes of each country where the marketing takes place.

    Luxembourg is the leading location for global cross-border distribution of investment funds. Luxembourg investment funds are distributed across Europe, Asia, Latin America, Africa and the Middle East.

    EY GFD is a set of innovative services developed by EY to support asset managers with the cross-border distribution and registration of their UCITS and AIF.

    EY GFD offers four core solutions designed to cover all aspects of cross-border fund distribution:

    EY GFD covers all key distribution markets in Europe, Asia, Latin America, Africa and the Middle East.

    EY GFD solutions are tailored to the specific needs of each client.

    Read more:



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 Investment_Funds in Luxembourg September 2013

Luxembourg Financial Connection - Issue 21

UCITS

The Luxembourg Specialized Investment Fund

AIFM

AIF Club