Beama outlines Belgian market and reg changes
The Belgian fund industry’s assets under management amounted to €148bn at end 2015 according to estimations of the Belgian asset management association (Beama).
2015 has been a year of positive inflows but that not supported by a positive market effect, Beama says.
Hugo Lasat (pictured), chairman of Beama, tells InvestmentEurope that inflows have been much in balanced funds in Belgium due to low interest rates and higher volatility.
Some 657 funds were registered at end 2015 on the Belgian public fund market of which 528 were foreign funds, 89 Belgian Sicav and 16 pension savings funds.
Lasat explains that investment funds have consolidated their share within the Belgian savings pool last year.
“The Belgian fund market has been growing for four consecutive years with positive net inflows, sometimes helped by a market effect.
“The share of investment funds in Belgian households’ savings grows, having reached 12.5% in 2015. This figure was not double-digit a few years ago. One in eight euros saved by Belgian households is invested in a fund,” he says.
Lasat depicts the Belgian market as mostly retail-oriented. He says total assets held by Belgian households exceed the total amount of their credits and believes the fund industry has a key role to play.
“Retail networks of large banks have changed their offer since three years because of low yield in classical savings products and a dramatic slump in interest margins. Financial Institutions have understood offering funds was much compelling for both distributors and individual savers,” Beama’s chairman outlines.
The Belgian market has also seen a big move in 2015 with the merger between Bank Degroof and institutional asset manager Petercam, managing together some €50bn in assets.
Lasat has been at the forefront as he was CEO of Petercam Institutional Asset Management and is now co-head Institutional Asset Management at Degroof Petercam as well as CEO of Degroof Petercam Asset Management.
He underlines having a European key player headquartered in Brussels is very positive but that the number of Belgian asset managers remains rather small compared to other countries.
“I regret that the Belgian asset management industry tallies more fund sellers that want to catch part of the Belgian savings pool than real fund management teams in Brussels.
“I would prefer more competition locally and I am favourable to any initiative. There is obviously room for entrepreneurs in the Belgian asset management industry, as long as they manage locally.”
On the regulation side, Belgium has been pro-active having implemented a speculation tax, whose rate amounts to 33%, since the start of 2016.
This tax applies to both resident and non-resident taxpayers on the capital gains they have realised on quoted shares, options and warrants or other financial instruments which have been acquired for consideration less than 6 months before the alienation for consideration.
The speculation tax can be avoided in two cases, consultant Deloitte sums up :
- Capital gains realised on shares, options or warrants acquired in the context of a professional activity (cf. employee stock option plans), where the acquisition has triggered a taxable professional income in the hands of the beneficiary, according to the ITC or similar foreign law provisions;
- Capital gains realised as a result of the transfer of quoted shares, options, warrants or other quoted financial instruments solely pursuant to the issuer’s initiative, and where no choice was available for the taxpayer [e.g. mergers, demergers, spin-offs, “squeeze outs” and (non-optional) stock dividends].
“Funds are logically not subject to the tax on speculation. However, it applies to Belgian individuals investing in “direct lines” which is unfortunate. This tax is probably the result of a political compromise. I am afraid it might be counter-productive,” Lasat points out.
Another law restricting the activities of so-called vulture funds has been voted in Belgium last year. It aims to limit how much such funds can claim from government debt when purchasing it. NML Capital and Yukos Universal have taken legal action against the law in March 2016.
“Such a law is irrelevant for the Belgian market. The truth is that financial institutions like us have not been consulted before. Vulture funds would have prevent buying unamortised discount bonds,” Lasat argues.
“Let’s recall that a few European countries had fixed income instruments prized far below par during the crisis. Was it speculative to purchase them? Not at all. On the contrary, it helped saving the problem,” he adds.
Regarding Ucits V and Mifid II, Lasat sees them as game changers with a forthcoming major impact on the asset management industry.
He assesses Belgian asset managers are prepared but the costs of implementation are heavy.
“Working groups at different asset management companies are studying impacts of Mifid II and Ucits V. It is not a walk in a park to be compliant with those regulations,” Lasat concludes.