The Director – Alternative Funds management of the global boutique for alternative funds in Luxembourg lists the current trends and challenges in the sector, and explains why responsive and proactive solutions, as well as proximity to client are key today.
What are the current trends in AIternative Funds Management industry?
Interest rates are extremely low. Traditional savings, deposits, money and bond markets no longer pay off. This current low yield/interest rate environment is favoring less liquid investment strategies, mainly driven by private equity, real estate, and venture capital. We see a growing appetite from traditional and new investors for asset managers with ESG strategies. In other countries, we note regular demands for strategies around cryptocurrencies, which respond to a need for novelty from investors. In Luxembourg, we also observe a real explosion in terms of alternative funds, both in number and value. Furthermore, asset managers of unregulated structures are also striving to set-up stable structures in the Grand-Duchy. In terms of services, current trends are ESG data reporting, AML/KYC on investments and the digitization of the client relation. This facilitates and streamlines the work and exchanges between all the actors, for the benefit of our customer.
Innovation is also about having a true discourse with customers: ‘Do what you say and say what you do’; This is what our clients expect
How is ZEDRA adapting in this context?
ZEDRA is favorable to any new strategic acquisition , that will strengthen our team and capacity to deliver to our clients. We recently acquired BIL Fund & Corporate Services*, to increase our footprint in the fund area. This will allow us to deal with both liquid and alternative funds whilst allowing more agility to deliver responsive and proactive solutions and proximity to our clients with dedicated teams. Clients expect us to simplify their lives and the life of their funds. This acquisition will broaden our expertise and ability to face complex demands, allowing us to partner with clients as they grow.
To support the growing trend of AIFs managed by AIFMs, we are setting up our own ZEDRA ManCo. This will enable us to cater for smaller promoters that might fall out of the appetite of the bigger players on the-market. ZEDRA believes there is a limit on the scalability in the alternative fund space; every client needs a solution for their specific investment strategy.
Which challenges and opportunities do you identify?
In terms ofchallenges , the unstopping trend for compliance – AML-KYC on investments and more generally – drives to greater complexity in governance. The main opportunity is led by innovation: our size allows us to identify the right solutions and implement them. For that, new technologies help us to gain efficiency and stay competitive. Innovation is also about having a true discourse with customers: “Do what you say and say what you do”; this is what our clients expect. Sustainable finance is becoming a real opportunity for Luxembourg, as the fund industry faces an increasing demand for ESG/sustainable investments products. Therefore, from an AIFM perspective, many players still have a great work ahead, to adapt and comply with new disclosure regulations and to get processes in place.
(*) subject to regulatory approval