FINANCE - FUNDS

Funds sector outlook

“The Nordic market is going to grow”



Isabel Høg-Jensen is head of the Nordic desk at the law firm Bonn Steichen & Partners. Photo credit: Mike Zenari

Isabel Høg-Jensen is head of the Nordic desk at the law firm Bonn Steichen & Partners. Photo credit: Mike Zenari

Ahead of the Association of the Luxembourg Fund Industry’s roadshow to Scandinavia, Delano spoke with its working group chair, Isabel Høg-Jensen, about the outlook for the Nordic funds market.

So you’re participating in the Alfi roadshow to Copenhagen and Stockholm on 5-6 October?

Yes, both... essentially because the Nordic market is going to grow, I believe, in the future.

Can you give us a sense of what you mean?

As of May 2021... Denmark, for instance, entered the top 10 list of origin of promoters.... I think this is a very positive and encouraging message that they’ve entered the top 10 list. And what we can also say is that Nordic asset managers [run by larger banks] have been here since the ‘80s... It’s not new, what might be new is that the smaller, mid-sized asset managers have already started to come to Luxembourg and I think there will be more of them in the future.

What are these investors looking for?

In Denmark, for instance, you have those large pension funds that traditionally invested in Ucits [retail funds]. And now the trend that we see is that they might also invest into liquid alternative investment funds, and particularly those who follow an ESG [responsible investment] strategy. And as you might know, you have the [EU] new regulation, the Sustainable Finance Disclosure Regulation, that came into force, where Ucits [management companies] and [alternative investment fund managers] have to disclose certain information on how they take into account sustainability risk in their investment decisions. So I think Luxembourg can certainly play an important role marketing themselves as a place where you want to follow the transition to the green economy.

Nordic fund managers have a reputation for being ahead of the curve when it comes to ESG. So what does Luxembourg offer them?

You can see certainly from the sustainable finance roadmap that Luxembourg has issued that there is a vision, and there’s a far-reaching sustainable finance strategy, [to] really contribute to the 2030 agenda, and also to the Paris [climate] agreement. So I do believe that that’s a common objective for the North and for Luxembourg to move into a green economy.

What are the challenges in serving the Nordic market from Luxembourg?

I think what is important when you serve the smaller and midsize, the upcoming independent asset managers from the North, is really to understand where they come from. Traditionally, they come from a setup which is different from the Luxembourgish one. In Luxembourg, a lot of functions are outsourced. We don’t have the asset managers in Luxembourg. Whereas in Denmark and Sweden, that’s not the case, they have them there. And they’re not used to outsourcing, they’re used to having control. And that also means an excellent corporate governance, because you have control... So I think when you onboard clients, especially from the North, at least that’s the market I know a bit more, it’s important for you to understand where they come from. And it’s important to give them comfort that what is delegated to Luxembourg service providers is done properly. And that they have sufficient control or insight or reports on what is done and how it’s done.

How does that manifest itself? Do they ask more questions than a Luxembourg or German or French fund manager?

Might be, it’s just because they have to get used to the setup... It’s not an issue, I would say, it’s just to keep in mind, to understand, where do they come from? Which kind of business model do they come from? And which one do you have to fit into?

This interview originally appeared in Delano’s October 2021 magazine. Read the print edition by subscribing today.