Governance practices continue to evolve across Luxembourg fund industry

PwC Luxembourg and the Institut Luxembourgeois des Administrateurs (ILA), today introduced the latest edition of the Luxembourg Fund Governance Survey. This 10th edition of the survey gathered insights from the boards of 122 investment fund and management companies covering both liquid and alternative products, a record number of participants.

In this survey, new data gathered by PwC Luxembourg and the Institut Luxembourgeois des Administrateurs (ILA) finds that governance practices continue to evolve across the Luxembourg fund industry, with ESG, cybersecurity, and board diversity outlined as increasingly important topics for boards to address in the coming years.

The survey also explores two new topics that will have lasting impacts on Luxembourg’s fund industry:

  • The growing importance of board’s responsibility to oversee ESG criteria in response to the rapidly advancing EU regulatory agenda.
  • The rise of new governance practices in the wake of the COVID-19 crisis.


Key themes and findings covered in the report include:

  • ESG – Although most of the boards surveyed believe they have the right composition, processes and structure in place, progress is still to be made as the survey suggests around 70% don’t have a common definition of ESG, nor have distinguished which ESG opportunities and risks are of strategic significance.
  • COVID-19 – The crisis has accentuated the need for boards to gain a better understanding of the potential risks and develop robust cybersecurity practices, especially as remote working is expected to continue to be common practice even after we have recovered.Board Composition – Research from the survey suggests an increase in the proportion of independent board members from 30% in 2018 to 35% in 2020 and a clear upward trend in the number of female board members from 14% in 2016, to 16% in 2018 and 22% in 2020.
  • Board organisation – An increase in the total frequency of board meetings among Luxembourg-based funds and management companies, with the average number of meetings taking place per year rising from 5.5 in 2018 to 7.7 in 2020.
  • Roles & Responsibilities  A large majority of boards (72%) both at the management company and fund level, receive regular reporting from the investment manager to exercise oversight over the portfolio management function.
  • Conflicts of interest – All the Super ManCo and UCITS ManCo boards surveyed, as well as 83% of AIFM boards, indicated that there is a written policy in place for identifying and handling conflicts of interest.

The aim in preparing this survey is to provide boards with insights into current good governance practices and to further strengthen the overall governance framework of the Luxembourg fund industry. The Luxembourg asset management industry is very active in providing practical guidance to board members as evidenced by the numerous publications, events and courses developed by both ILA and ALFI, several of which are referenced in the results to the survey.


Michael Delano, ILA Fund Committee Chairman and PwC Luxembourg Partner said:

The importance of this survey exercise is heightened in the current environment. The industry continues to experience deep transformations in the face of various concomitant factors – continued intensification of regulatory oversight, the current impact of the COVID-19 pandemic, and a post-Brexit environment that still needs to be defined.

Luxembourg-based funds and management companies have shown resilience in the face of the economic disruption brought on by the pandemic and were quick to follow the CSSF’s guidance on remote working, both at management and board level. As the fund industry recovers from the COVID-19 crisis, it will be interesting to see in the next edition of our survey if any of the reactions to the pandemic have been long-lasting.”


Carine Feipel, Independent Director and Attorney at Law – Chair of the Luxembourg Directors Institute (ILA) said:

ILA is proud to be presenting the 10th edition of the Fund Governance Survey together with PwC Luxembourg. The investment fund industry is a fundamental pillar of the Luxembourg economy. Having good governance in both investment funds and management companies is key for the internationally recognized brand of our funds and the outstanding reputation of Luxembourg’s fund industry.

The trend to more and better governance in funds and their management companies is clearly evidenced by the over 120 market players participating in the survey, a constantly increasing number. This trend is certainly triggered by legal and regulatory requirements, but also by the value that good governance brings to funds and their investors. 2020 has clearly shown that robust governance, but still flexible enough to adapt to a rapidly changing environment, is essential to face the crisis that we could not foresee some months ago. The Fund Governance Survey therefore is issued at a particularly interesting moment and reflects the experiences gathered during this very unusual past year. At ILA, we have certainly done our best to help Directors to address the governance challenges that arose throughout the year.

I would like to warmly thank PwC for their continued support to this Fund Governance Survey, notably Mike Delano who chairs ILA’s Investment Funds Committee. My sincere appreciation also goes to the members of our Funds Governance Committee as well as all the participants in the survey.”

The Luxembourg Fund Governance Survey findings can be found in full here.

This Week’s Most Read

This Week’s Podcasts Most Read

Keep updated on the most important financial events 

Make sure you are an informed

wealth professional..

Adblock Blocker

We have detected that you are using

adblocking plugin in your browser. 

IFA Magazine