AGEFI Luxembourg - avril 2024

Avril 2024 35 AGEFI Luxembourg Fonds d’investissement A s at 29 February 2024, the total net assets of undertakings for col- lective investment, compri- singUCIs subject to the 2010 Law, specialised invest- ment funds and SICARs, amounted to EUR 5,393.311 billion compared to EUR 5,326.332 billion as at 31 Ja- nuary 2024, i.e. an increase of 1.26%over onemonth. Over the last twelvemonths, the volume of net assets in- creased by 4.43%. The Luxembourg UCI industry thusregisteredapositivevariation amounting to EUR 66.979 billion in February. This increase repre- sentsthesumofnegativenetcapi- tal investments of EUR 2.442 bil- lion (-0.04%) and of the positive development of financial markets amounting to EUR 69.401 billion (+1.30%). The number of underta- kings for collective investment (UCIs) taken into consideration totalled3,260,against3,269thepre- viousmonth.A total of 2,132 enti- tiesadoptedanumbrellastructure representing 12,795 sub-funds. Adding the 1,128 entities with a traditional UCI structure to that figure, a total of 13,923 fund units were active in the financial centre. As regards the impact of financial markets on themain categories of undertakings for collective invest- ment and the net capital invest- ment in these UCIs, the following can be said for the month of February. Equity markets conti- nued to rally, for the fourthconse- cutivemonth, mostly due to posi- tiveeconomicdata,showingnota- bly that the US economy is still resilient and that it is improving slightlyinEurope.Equitymarkets also benefitted from the publica- tion of quarterly results, which mostly met or exceeded expecta- tions. In that context, the US and European equities UCI categories posted positive monthly perfor- mances. The Asian equities UCI category registered the best monthlyperformance,mainlydue to China, which rebounded from multi-yearslows,afterthegovern- mentannouncedseveralinterven- tions to support the economy and the markets, notably with a view to reducemortgage rates. All the other equities UCI catego- riesalsoperformedwell,including Japanese equities while the Yen weakened, butwith the exception of LatinAmerican equities, which posted a slightly negative perfor- mance. In February, the equity UCI categories registered an ove- rall slightlypositive capital invest- ment with inflows, mostly in the European equities UCI category, being partially offset by outflows in the UCI categories Global mar- ket equities, Asian equities and Latin American equities. The publicationofstrongerthanexpec- tedinflationdataforJanuary,both in the US and in Europe, reduced expectationsforimminentinterest rate cuts, leading to a rise inyields and to negative performances for most fixed income UCIs catego- ries. High yield and Emerging bonds posted barely positive per- formances. In February, fixed incomeUCIs registeredanoverall positivenetcapitalinvestmentdue to significant inflows in all bond UCI categories whereas the money market UCI categories registered outflows except for USDmoneymarket. Source :CSSF Global situation of undertakings for collective investment 6000 5000 4000 3000 2000 1000 0 4000 3500 3000 2500 2000 1500 1000 500 0 Feb.23 Mar.23 Apr.23 May.23 June23 July23 Aug.23 Sept.23 Oct.23 Nov.23 Dec.23 Jan.23 Feb.23 Thedevelopment of undertakings for collective investment is as follows: ByAlexandre HECKLEN, Partner - Managing Director & François-Xavier LE CORRE, Legal Officer, Mc Square T he EuropeanUnionhas taken a significant step in modernising the regulatory framework for alternative invest- ment funds (AIFs) and theirmanagers (AIFMs) with the adoption of the Alternative Investment FundManagersDirec- tive II (AIFMD2). The text of theAIFMD2was published on 26March 2024 andwill enter into force on 15April 2024. Thisnewdirective,buildinguponthe originalAIFMD introduced in 2011, aims to address the evolving landscape of the alternative investment industryandensureamoreharmonisedandresilient regulatoryenvironmentacrosstheEU.Someofthese changes will however apply as well to the UCITS world by aligning some requirements between the AIFMDand theUCITSDirective.AIFMs andUCITS managementcompaniesshallgoingforwardcarefully assess the impacts of these directives on their organi- sation and control frameworks. Loan originating funds Thenewregimecomprisestwosetsofrulesforloans, onewhichonlyappliestoAIFsfallingwithinthenew definition of “loan-originating AIF”, while the other isrelevantforallAIFsthatoriginateloans,irrespective of whether loan origination is their main strategy, or theyqualifyasloan-originatingAIFs.Aloan-originat- ingAIF is defined as anAIFwhose investment strat- egy ismainly tooriginate loans orwhere thenotional value of theAIF’s originated loans represents at least 50%of its net asset value. Loan-originatingAIFs will besubjecttoallthenewrequirements,whileAIFsthat do not fall within the definition of loan-originating AIFsbutengageinloanoriginationwillhavetocom- plywithonly certainnewrequirements. Shareholder loans are defined under AIFMD 2 as loans “granted by an AIF to an undertaking in which it holds directly or indirectly at least 5 % of the capital or voting rights, and which cannot be sold to thirdparties independently of the capital in- struments held by the AIF in the same undertak- ing”. AIFMs managing AIFs that originate only shareholder loans are exempted from the require- ments on leverage caps and the requirements on policies, procedures and processes for the granting of loans and credit riskmanagement, provided that the notional value of those loans does not exceed in aggregate 150%of thatAIF’s capital. AIFMD 2 introduces new requirements specifically applicabletoloan-originatingAIFs,includingarestric- tion on open-ended structures and leverage caps. Loan-originatingAIFs must comply with a leverage limit of 175% if they are open-ended or 300% if they are closed-ended, subject to the right of the AIFM’s competentauthoritytoimposestricterlimits.Existing AIFs established before 15 April 2024 are grandfa- thered from these requirements, either indefinitely if theydonotraisecapitalafterthatdate,oruntil16April 2029 if theydo raise capital. For allAIFs that originate loans, including loan-origi- natingAIFs,AIFMD2introducesa20%concentration limit for loans tocertaincategoriesof borrowers, such asfinancialundertakings,AIFs,andUCITS.Italsoim- poses a risk retention requirement, whereby theAIF must retain 5% of the notional value of any loan it transfers to thirdparties. The newdirective also includes provisions on the al- location of loan proceeds and expanded disclosure obligations, as well as prohibited activities such as grantingloanstorelatedentitiesandpursuing an “originate-to-distribute” strategy. AIFMD2recognisestheimportanceofloan origination activities by AIFs and aims to establish an efficient internal market for such activities, while ensuring a uniform level of investor protection. The directive provides a solid foundation for the future growth and development of the alternative investment industry in Europe, though some challenges remainaround the practical implementation andthepotentialfordiverg- ing national approaches. Close collaboration between stakeholders will be key to navigating thenewregulatory landscape successfully. Liquiditymanagement tools Beyond loanorigination, liquiditymanagement re- quirements for open-endedAIFs and UCITS are as well reinforced. AIFMs and management compa- nies will be required to select at least two liquidity management tools from a predefined list, with the exception of money market funds, which may use a single tool. This enhanced frameworkaims tobol- ster the resilience of the sector andprotect investors during periods of market stress. ESMA will issue RTS and guidelines regarding these liquidityman- agement tools. Increased transparency and investor protection Increased transparencyand investor protectionmea- sures are another key focus of the new directive. AIFMs will face expanded reporting obligations, in- cluding the annual disclosure of all fees and charges incurred by the AIF and its investors. This push for greater cost transparency aligns with broader EU ef- forts to empower investors and foster competition. Additionally,AIFMD2 encourages the appointment ofindependentornon-executivedirectorsonthegov- erning bodies of AIFMs managing retail AIFs, strengthening governance standards. Depositary passport While themuch-anticipated depositary passport did notmaterialise,AIFMD2 does provide for the possi- bility of appointing a depositary fromanothermem- ber state in certain circumstances, subject to specific conditions. This represents a step towards increased cross-border provision of depositary services, even if a full passport remains a goal for future reforms. Delegationmodel The delegation model, a cornerstone of the Luxem- bourg fund industry, has been a topic of intense de- bate during the AIFMD 2 negotiation process. The final text recognises the importance of delegation ar- rangements while subjecting them to enhanced su- pervision, requiring AIFMs and management companies tonotify their national competent author- ityofsucharrangementsandprovideongoingreport- ing. This balanced approach aims to enable efficient fund structureswhile ensuring adequate oversight. What’s next? Lookingahead,AIFMD2setsthestageforamorein- tegrated and robust alternative investment sector in theEU.ThepracticalimplementationofAIFMD2will require close collaboration between fund managers, service providers, and regulators to ensure a smooth transition. Industry associations, such as ALFI, will playavital role in facilitatingdialogueandproviding guidance tomarket participants even if Luxembourg AIFMsandmanagementcompaniesarealreadysub- stantiallyinlinewiththeprovisionsofthisnewinitia- tivethankstotheapplicationofCSSFCircular18/698. WhileAIFMD2 represents a significant step forward intheregulationofalternativeinvestments,somechal- lenges remain. The directive’s provisions leave room forpotentialdivergingnationalapproachesduringthe implementation process, which could hinder the es- tablishmentofatrulyharmonizedinternalmarketfor loanoriginationactivities.Policymakersandindustry stakeholderswill need to remainvigilant in ensuring a consistent andefficient applicationof the newrules across the EU. Overall, AIFMD 2 sets the foundation for a more re- silient,transparent,andinvestor-centricalternativein- vestment landscape in Europe. As the industry continues to evolve, regulatory frameworks must adaptaccordingly.Thislatestpoliticalagreementpro- videsasolidbasisforthefuturegrowthanddevelop- ment of the alternative investment sector, though its ultimate success will depend on the collaborative ef- forts of all involvedparties. AIFMD 2: Shaping the Future of Alternative Investments in Europe D ans le monde en constante évolu- tion des cryptomonnaies, un événe- ment important est à l'ordre du jour, qui intéresse aussi bien les nouveaux venus que les investisseurs expérimentés : le halving du Bitcoin. Cet événement, qui se produit environ tous les 4 ans, a eu un impact significatif sur le prix et l'offre de Bitcoins dans le passé. Le cinquième halving étant prévupourle19avril2024,laspéculationsurl'impact potentiel de celui-ci va déjà bon train au sein de la communauté crypto. JulienVallet,CEOdeFinst,laplateformed'investisse- mentencryptomonnaiesàlacroissancelaplusrapide du Benelux, explique le concept de la réduction du halving du Bitcoin : «Pour bien comprendre ce que signifielehalvingduBitcoin,ilfautd'abordcompren- dre les principes de base du Bitcoin lui-même : les mineursvérifientlesblocs,enajoutentdenouveauxà la blockchain et gagnent des Bitcoins en récompense deleursefforts.Tousles4ansenviron,larécompense desmineursestdiviséepar2,cequiréduitconsidéra- blement l'afflux de nouveaux Bitcoins sur le marché. Cette réduction de moitié, qui se produit tous les 210.000 blocs, est destinée à lutter contre l'inflation et se poursuivra jusqu'à ce que la quantité totale de 21 millionsdeBitcoinssoitatteinte.Le5 e lehalvingramè- nera la récompense de 6,25 à 3,125Bitcoins par bloc». LehalvingduBitcoinconstitueunmécanismeintégré dans la conception de base du Bitcoin, conçu pour réduire progressivement l'émission de nouveaux Bitcoins et atteindre finalement une limite de 21mil- lions, contribuant ainsi à lanaturedéflationnistede la monnaie. Cette rareté intégrée est similaire à celledes métaux précieux tels que l'or, ce qui a valu auBitcoin le surnomd'«or numérique». En ce qui concerne l'impact attendu sur le prix du Bitcoin, M. Vallet ajoute : «Après les précédents hal- vings, nous avons toujours constatéunehausse spec- taculaireduprixduBitcoin,conséquenceduprincipe del'offreetdelademande.Commeunnombremoins élevé de Bitcoins est mis sur le marché après le hal- ving, le prix a tendance à augmenter si la demande reste constante ou s'accroît. L'augmentation des prix qui a eu lieuunanaprès le halving 2020 s’est chiffré à environ550%.Toutefois,comptetenudesévolutions récentes dumarché, telles que l'introductiondes ETF BitcoinSpotetl'augmentationsignificativeduprixdu Bitcoin au cours des derniers mois, nous prévoyons que l'augmentation après le halving pourrait ne pas se révéler aussi importante». L'anticipation autour du halving génère un large éventaild'opinionsetdeprédictionsauseindelacom- munauté crypto. D’aucuns y voient une opportunité de gains significatifs, tandis que d'autres mettent en gardecontrelavolatilitéetl'imprévisibilitédumarché. Malgré ces divergences d'opinions, le halving demeure un moment clé qui met en évidence les caractéristiquesuniquesduBitcoinetsonpotentielen tant que technologie financière disruptive. Le halving du Bitcoin, réelle opportunité ? ©Freepik