On Tuesday 17 January 2023, PwC Luxembourg, together with the Institut Luxembourgeois des Administrateurs (ILA), presented the 11th edition of the Luxembourg Fund Governance Survey at the ILA and PwC co-hosted Annual Fund Day at PwC’s premises in the Cloche d'Or, in which insights were gathered from the boards of 137 investment funds and management companies covering both liquid and alternative products.
The event was attended by over 200 stakeholders from across the Luxembourg fund industry. The over-riding message was that good governance practices in the Luxembourg fund industry continue to develop, while directors are increasingly broadening their areas of expertise; and, in the coming 12-24 months, boards of funds and management companies will be focusing on regulatory developments, Environment Social Governance (ESG) and investment performance.
The volume of investment funds and management companies broke the record of 122 participants set in the previous edition; this increasing number demonstrates the continued attention market participants are paying to good governance.
Michael Delano, ILA Fund Committee Chairman and PwC Luxembourg Partner, and Andrea Montresori, incoming ILA Fund Committee Chairman and PwC Luxembourg Partner said “At a time of increasing macroeconomic instability and geopolitical uncertainty across Europe, Luxembourg’s fund industry – and the financial centre as a whole – has remained resilient and has proven to be more than capable of weathering turbulent storms. Good governance practices have become heavily internalised across the industry, and this is one of the core reasons."
This year’s survey builds on the new additions made to the previous edition, particularly regarding ESG. With the increasing number of ESG-related regulations coming into force in Europe, and with the growing attention stakeholders in the global asset and wealth management industry are showing towards ESG, the latest edition of the survey examines how participants in the Luxembourg fund industry are reacting. Unsurprisingly, ESG is increasingly occupying a prominent position in boards’ agendas. In addition, given the Financial Action Task Force’s visit to Luxembourg in 2022, the survey dedicates a whole new section to anti-money laundering (AML). Promisingly, the overwhelming majority of boards have put in place strong policies and frameworks to combat AML and the financing of terrorism. The authors of the report expect these two topics, alongside regulatory developments and changes, to continue to figure prominently as issues of concern for participants in the fund industry in future editions of the survey.
Michael Delano thanked "all 137 directors and chairpersons who took the time to share their thoughts and insights by participating in the survey, the members of the ILA Fund Committee for designing the survey, and our colleagues from PwC Luxembourg’s Global AWM & ESG Market Research Centre for analysing the data and preparing the report."
Carine Feipel, Independent Director and Attorney at Law – Chair of the ILA said “Every two years, the ILA-PwC Fund Governance Survey is awaited by market participants to find valuable information about market trends and governance best practices. This 11th edition again evidences a number of improvements in the governance of investment funds and management companies. It also shows the focus of boards on ensuring compliance with regulatory requirements, notably on ESG and AML. The training of board members remains a key priority in order to enable them to fulfil their roles. We are grateful for the input of the many participants in this survey, as well as all the persons who have worked on the analysis of the data received and the production of this survey.”