Luxembourg Funds Intelligence Briefing (11/23/2020)

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Luxembourg Funds Intelligence Briefing
16th November 2020

Many investment funds increased their cash buffers in March in response to substantial large redemption requests at the onset of the Covid-19 pandemic, but cash positions have since sunk back to pre-lockdown levels as funds have invested in booming stock markets, according to data provider eVestment. Equity funds’ median cash holdings fell to 1.8% of total portfolio assets at the end of September, the lowest level recorded by eVestment in 13 years, down from 2.5% six months earlier. However, analysts fear portfolio managers are discounting the risk of fresh market turbulence if bankruptcies soar and government support for the economy is scaled back. Gabriela Figueiredo Dias, chairwoman of Portuguese regulator CMVM, warns that recent fund inflows have not been matched by higher liquidity positions.

— Simon Gray, Editor in Chief

Asset Management
Active ownership critical to maintaining sustainable investment portfolio: Quintet’s James Purcell

Asset managers must take an activist approach to help drive a more sustainable economy, argues James Purcell, group head of investment at Quintet Private Bank, saying that to exclude the securities of firms with the lowest levels of ESG or sustainability compliance is insufficient. He believes the short- to medium-term impact of the exclusionary approach is often minimal. although ultimately it will make it harder for companies to raise capital. Instead, Purcell says shareholders need to engage fully with companies to ensure they understand the need for a transition to increased sustainability in their activities. He says Quintet’s sustainable investment engagement specialist helps the bank to establish a dialogue and vote at the shareholder meetings of companies whose securities it recommends to clients. Quintet voted on 8,988 management and shareholder resolutions relating to ESG issues at 592 AGMs during the first nine months of this year.

Best source: Delano

Fund Services
ManCo Allegro rebrands as Ocorian Fund Management

Luxembourg-based third-party management company and fund administrator Allegro has been rebranded as Ocorian Fund Management, following its acquisition by Ocorian in April. The group now employs nearly 150 people in Luxembourg, where it provides services to corporate clients, investment managers, institutional investors and high-net-worth individuals in Europe and elsewhere. Ocorian Fund Management managing director Thomas Fahl says that as part of the Ocorian group, which has $260bn in assets under administration and 1,250 employees, the company, which is licensed to provide services to both UCITS and alternative funds, will be able to draw on the group’s international footprint and offer clients a wider range of fund and fiduciary solutions.

Best source: Luxembourg Chronicle

Sanne appoints Jan Barre as director of business development

Alternative asset and corporate service provider Sanne has appointed Jan Barre as director of business development, focusing on the company’s key areas of focus such as private equity, real assets, private debt, capital markets and hedge funds. Barre has more than 15 years’ experience in the financial sector and held senior business development positions at Clearstream Banking Luxembourg and most recently at International Fund Services and Asset Management, where he specialised in fund services platforms.

Best source: Paperjam (in French)
See also: Luxembourg Chronicle

Fund cash reserves decline to pre-pandemic levels, increasing risk in second Covid-19 wave: regulator

Gabriela Figueiredo Dias, head of Portuguese regulator CMVM and chairwoman of the investment management standing committee at the European Securities and Markets Authority, has warned that liquidity cushions at European investment funds have not kept pace with inflows, risking leaving them exposed to the economic impact of the second wave of Covid-19 infections. Funds had built up cash reserves of 2.5% early in the pandemic at the end of March to cope with redemptions, but market research firm eVestment says liquidity has fallen to pre-pandemic levels at 1.8% at the end of September.

Best source: Financial Times (subscription required)

Facts and Figures
Most financial service providers expect revenue to be lower than forecast this year

Around 60% of financial service providers expect their revenue this year to be lower than forecast, according to a survey of 400 executives carried out by Luxembourg for Finance last month. Around 75% of respondents do not expect an increase in international investment in 2021, with 31% expecting investment to be down from this year. While 55% say they are somewhat confident about increasing revenue next year, only 9% are completely confident, and 56% plan to reduce their operating budgets. Three-quarters of respondents favour the designation of at least one home-working day per week, and a third would be willing to accept two or three days.

Best source: Paperjam (in French)

See also: Wort (in German)

BGL BNP Paribas invests in KYC automation start-up i-Hub

BGL BNP Paribas has subscribed to KYC automation start-up i-Hub KYC services, and taken a shareholding in the firm, which was established by Post Luxembourg in 2019. I-Hub is developing a centralised hub through which customers can access a centralised information repository, where they can deposit or update identification documents, access public information and share files with other financial institutions in order to improve the effectiveness and reduce the costs of anti-money laundering procedures.

Best source: Paperjam (in French)
See also: BGL BNP Paribas

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