Funds Europe – Can you each highlight one important theme right now in the Luxembourg funds industry from your perspective and tell us why this is important in the year ahead?
Kaveh – There are two big trends. For many years, we expected the year of ESG to occur. Finally, in 2020, we saw these massive flows. Regulation is going to accelerate that movement.
The second big trend is real assets – property, private equity, infrastructure, private debt, debt infrastructure, and the ‘retailisation’ of unlisted assets.
Webster – Without a doubt, the changes that are required under the implementation of SFDR is going to be a significant resource challenge for many companies to work through. There is a substantial volume of work around that, particularly in the first half of the year.
There is also the continuing debate around how delegation and substance develop within the EU – in particular the Esma consultation which suggested potential limitations, a rolling back of some of the ability to delegate to third countries. For our group, it would also have significant implications in terms of our ability to delegate to the US and Asia, particularly in some of the portfolio management-related aspects. I think that whole landscape of how third-party delegation develops, particularly outside of the EU bloc, has some mileage to go.
Forelli – We are at a pivotal point with sustainability, which will be key for the future of our societies, our planet and our industry. As stewards of the long-term savings of millions of people, we have a responsibility to invest for a sustainable future. For many years, we were speaking about the need for regulation to help this to become taken seriously and now it is finally here, with its difficulties and challenges – the SFDR [Sustainable Finance Disclosure Regulation] and the March deadlines, for example – but offering an incredible opportunity to finally allow companies to measure their sustainability, their ESG integration, and their impact. It will also bring more transparency and clarity to our customers, enabling them to make informed investment decisions.
Maurier – On the SFDR, I think this is really the first challenge including the difficulty of the technical standards.
Another challenge, certainly for service providers as alternative investments grow, are the processes around alternative funds, such as delivering daily NAVs and the associated TA processes for the retailisation of those assets.
Noel – The adoption of technology and digitisation to leverage innovation, optimise operations and better manage data as well as strengthen resiliency. Our enhanced technology platform, Northern Trust Matrix, has been built to digitalise our asset servicing business by combining technology and operating model innovations supporting new ways of managing and delivering data.
The second theme point is opportunity in the alternative investment world and the card that the Luxembourg market has to play in this respect.
Bechet – To echo the point about the human factor: this is really important because we work in a human business. In the past, people wanted more remote working, yet today people are fed up with video conferences and teleworking. We have to find a balance.
I would also repeat the point about sustainable finance. We should not be afraid of that. A study in November based on a survey of thousands of institutional investors found that in two years’ time, 77% of institutional investors will not consider non-ESG funds.
This is really affecting the whole value chain from product design to distribution; this is really changing the philosophy of what we’re doing and the way we do things. This is a massive last piece of legislation that will keep us busy for the coming years.
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