LEADING THE WAY TO A SUSTAINABLE FUND INDUSTRY

I’ve been active in the fund industry in Luxembourg for more than twenty years, so I’m now really looking forward to this new chapter.

I see this role from two angles. Firstly, to represent our sector, in Luxembourg and abroad. Secondly, the fund industry provides an important social function for our economy. So, investment funds play a role in helping individual investors to meet longterm financial and social but also nowadays, environmental goals. I think we have a unique opportunity to reshape our industry into something which is more aligned with the values of our changing society and better connected to the interests of current and future generations. That excites me.

My focus will be on Sustainable Finance, Retirement Savings, Alternative and Private Investments, and FinTech/Digital. Tackling climate change is a worldwide number one priority and the EU Commission has ambitious plans in this field, in particular in sustainable finance. Climate change is now a systemic risk, so, there must be a global approach. How can we help? I think by offering sustainable funds, we can channel savings from our investors into companies which make sustainable decisions, and which sensibly allocate their capital. Another crucial topic is retirement savings. Europe is facing a challenge regarding retirement savings. Some of the larger EU member states may see a decline of over 20% in their public pension replacement rate according to the European Commission Aging Report. The asset management industry has a role to play to encourage more of the population to save for their retirement. The continued development of the alternative investment fund industry is also essential. This sector is contributing to the success of the Capital Markets Union, the European Commission’s flagship project to boost jobs and growth in the European Union. Finally, FinTech is an ongoing priority because it is a disrupter in our market, and we have to look into it and work on that topic as well. We will maintain our regular interaction with FinTech players and policymakers so that we can develop innovative digital tools in a modern legislative framework. In addition to these priorities, we will continue to focus on opportunities arising from the development of new markets. Mexico, for example, has opened up its pension fund market to investment outside the country. That’s a great opportunity. We can oer savers in this market access to our products, which are globally recognised as a safe brand.

Luxembourg is already a well-known platform for sustainable finance, but work in this area must be accelerated. I think we now need to incorporate sustainable finance in the whole investment process. How do you make investment decisions? How do you assess the climate risks of companies? Then there will be a requirement for more transparency. A unified classification system is necessary, so that we can define what a sustainable company is and what is not. We will also need to ensure that the products we are selling are doing what they say on the tin. We already have LuxFLAG in Luxembourg, which provides a label to eligible investment vehicles. The EU also plans to establish labels for all green financial products.

The Pan-European Personal Pension Plan (PEPP) will represent an excellent new product for European citizens and also an opportunity for Luxembourg as it will enable savers to have a single pension product when they move from one EU country to another. In Luxembourg we aim to specialise in launching these pan-European products and export them across the EU. If we could combine this with online investing, then I am of the opinion that this can become a cohesive proposition, so that employees have their savings in the same vehicle. I believe with the introduction of the PEPP we could even attract a new ecosystem in Luxembourg, and this is something we are actively looking to develop.

FinTech and digital innovation are an important area of focus for us. Digitalisation will impact the whole value chain. Over the next two years, ALFI will continue its regular interaction with FinTech players and policymakers so that innovative digital tools can be developed in a modern legislative framework. These tools will help to reduce costs and increase efficiency in the industry. They will also improve the service offerings for existing savers and enhance the connectivity to new savers.

The UK and Luxembourg are long-standing partners in the fund industry. UK asset managers account for 18.6% of AuM in Luxembourg investment funds. With Brexit, we have seen activities relocating from the UK to Luxembourg and also new funds coming to Luxembourg. Some 35 companies have an increased presence in Luxembourg. So, yes, there is growth there. Obviously, with Brexit, we are still trying to figure out what will happen. Interim solutions are in place both in the UK and in Luxembourg. We are now waiting to see what our future relationship with the UK will be.

Diversity and inclusion are topics very close to my heart. The asset management industry still has a lot of work to do and it’s important to move the issue higher up the agenda. I will promote the benefits of diversity and inclusion in the sector, not only concerning gender but across all dimensions. I think it’s essential to get more women at senior and board level, but also make sure we have a diverse pool of talent in the industry. For example, if we want our industry to become more innovative in the digital space, we need to hire the best tech specialists out there. The more diverse and inclusive you are, the more you attract a qualified workforce.