THE BOTTOM LINE> 06 FOCUS TRANSPARENCY VS. CLARITY

> 18 ROCKSTAR SIR BOB GELDOF: GO SOUTH!

> 14 AIFMD REPORTING TURNING OBLIGATION TO OPPORTUNITY

LUXEMBOURG HOSTS THE 2013 IOSCO CONFERENCEINTERVIEW WITH JEAN GUILL AND JEAN-MARC GOY, CSSF

The fund data & document magazine by KNEIP #2

>

10

Pai

ntin

g of

Pau

l New

Man

cou

rtes

y of

Olll

Jean G

uill

Jean-Marc Goy

27058SCGBM_The Btm Line_280x200w_Inc.ai 1 7/30/13 3:33 PM

EDITORIAL 5

FOCUS 6TRANSPARENCY VS. CLARITYBy Campbell Fleming - Threadneedle

20 YEARS 8 FOCUS, LISTEN, ADAPTAN INTERVIEW WITH BOB KNEIP

LONG STORY 10 IOSCO Luxembourg 2013: Impact InsightInterview with Jean Guill and Jean-Marc Goy, CSSF

AIFMD REPORTING 14 TURNING OBLIGATION TO OPPORTUNITYBy Mario Mantrisi - KNEIP

ANALYSIS 16 TAKING AFRICA'S GROWTH SERIOUSLYBy Josée-Lynda Denis and Razia Kahn

ROCKSTAR 18SIR BOB GELDOF: GO SOUTH!Presentation highlights

WHITE NIGHT! 19THE RENOWNED FUND FORUM INTERNATIONAL COCKTAIL RECAP

SPOTLIGHT 20 CLIENTS CRAVE TECHNOLOGY-LED ENGAGEMENT

CSR 23 IT'S GOOD BUSINESSBy Diane Muller-Kneip

WHEN BRUSH MEETS BUSINESS 24 A conversation with Martin Thommen and Olll

TOOLBOX 26 Capitalising on UCITS for KIID Requirements

The fund data & document magazine by KNEIPChief Editorial Officer: Bob Kneip — Editorial staff: Troy Bankhead, Josée-Lynda Denis, Campbell Fleming, Yvonne Goucher, Lee Godfrey, Jean Guill, Jean-Marc Goy, Razia Kahn, Mario Mantrisi, Diane Muller, Mash Patel, Martin Thommen, 360Crossmedia — Conception & coordination: 360Crossmedia — Artistic Director: Tom Norest — Cover photo: 360Crossmedia/C.O — Print run: 500 copies — Date: June 2013

TABLE OF CONTENTS

03

© D

R

Are you lost in a mountain of fund data?

Turn an operational problem into a chance to wow new investors with fact sheets and fund presentations that are accurate, consistent, timely – and beautiful.

You are here

kur.to/line

+ Unified Data Model reduces risk by ensuring that data is accurate and consistent

+ Quality rendering with Adobe InDesign® Server: complete layout/styling control

+ Secure, compliant approval process: role-based permissions; auto-email notifications

+ Maintain a full audit trail including document history and versioning

+ Secure APIs to automatically distribute factsheets to Fundinfo.com and other channels

+ Embed QR codes in PDFs: investors get direct access to your site via mobile devices

Free E-book:Fact Sheet Production -Work Smarter Not Harder

Welcome to the 2nd edition of The Bottom Line, where Jean Guill and Jean-Marc Goy of the CSSF provide their views on the forthcoming IOSCO conference in Luxembourg, Campbell Fleming tells how Threadneedle are tackling the challenges presented by RDR, and following Bob Geldof’s rousing speech to a packed room in Monaco, Standard Chartered’s Josée-Lynda Denis and Razia Khan provide insight into investment in Africa.

Industry experts also provide an update on AIFMD, innovative web and mobile technology as well as CSR, and we get the chance to observe Martin Thommen and Olll who flew into our offices in Luxembourg to discuss art, industry and business.

You will also note that each article will feature a “bottom line”, a key take-away point on each topic. We hope they will both inform, and inspire you to act.

Lee Godfrey

EDITORIAL

05

© K

NE

IP

DEAR FRIENDS,

06

FOCUS

TRANSPARENCYvs. clarityTHE ASSET MANAGEMENT INDUSTRY IS RESPONDING TO SEVERAL NEW REQUIREMENTS TO IMPROVE THE WAY IT COMMUNICATES WITH AND CHARGES CLIENTS, INCREASING TRANSPARENCY AND CLARITY AS WELL AS REMOVING ANY SUGGESTION OF “COMMISSION BIAS” IN THE ADVICE

PROCESS.

Retail Distribution ReviewThe RDR was one of the UK directives designed to improve transparency, quality of advice and restrict commissions. However with it, the RDR has brought increased complexity and potential ambiguity for the end-client, as well as potential additional costs as services are disaggregated. Such costs may be borne by the end customer via both an overall increase in costs and taxation of some of these “benefits”. Furthermore, there has been a reduction in the number of advisers in an industry where products are sold but not bought at a time when many economies struggle to improve savings rates.

Threadneedle, clarity for the clientComplexity has mainly arisen in the creation of unbundled share classes, stripping away commission to allow for a clearer and fairer representation of performance and price. They also allow asset managers like Threadneedle to more clearly evidence the value that can be added through active management, with a management fee only, platform or full service range of classes. With the performance on the new share classes having little or no history, the full benefits of transparency will not be seen for a number of years yet and may actually result in added confusion. I fear clients will be left without clarity, presented with complicated utility-like bills which will be near to impossible to understand or make consistent comparisons. The RDR and KIIDs have triggered almost 100 new share classes and 8000+ documents a month from Threadneedle alone, along with streams of performance to evaluate, not to mention having to deal with re-registration and switching from

BY CAMPBELL FLEMING - THREADNEEDLE

legacy to new classes. These have been just some of the implications of the reforms.

The right information to the right clientsSince the start of the year the industry has also seen fund information disclosures designed to provide greater transparency by seeking disclosure in a clear, fair and not misleading manner. There has been little focus on the true cost of ownership. But Threadneedle strives to get the right information to the right clients. For example, we have streamlined data inputs across the plethora of documents produced for our clients, harmonised fund data (such as performance periods) across documents, added OCFs to Factsheets, and sought reviews from the Plain English Society. This is all part of a much needed broader cultural shift being seen across the industry, which puts the ultimate end-client at the heart of all our businesses. We have reaffirmed our stance on being upfront and keeping clients and the end-customer fully informed through increased communication, direct client research, education programmes and by offering direct investors an enhanced online service.

Enhancements come at a costBut these enhancements come at a cost. The full range of operational, research and investment costs impact all those in the value chain. The irony of these changes is that the reams of disclosures, the vast quantity of information, the discord about definitions and methodology behind TERs and OCFs may together deepen the very ambiguity that the RDR sought to alleviate as well as increase costs delivered by a smaller number of advisers focussing only on the wealthy.Despite the challenges, RDR will yield future benefits, not least improved transparency and a revitalised client focus in the industry; but with it come unintended consequences as the overall impact of the reforms take many months to truly understand. Let’s hope our clients understand and embrace these changes as well – after all, it's all about them!

© 3

60

Cro

ssm

edia

/A.C

.

Let’s hope our clients understand and

embrace these changes as well – after all, it’s

all about them!Campbell Fleming

Chief Executive Officer, Threadneedle Investments

Despite the challenges, RDR will yield future benefits, not least improved transparency and a revitalised client focus in the industry.

THE BOTTOM LINE

© 3

60

Cro

ssm

edia

/LD

When you do things that you like doing, generally you do them well and you can go home happy each day.”

Bob Kneip, CEO of KNEIP

FOCUS, LISTEN, ADAPT

Sustainability comes from listening, adapting, and then listening some more.

THE BOTTOM LINE

09

20 YEARS

Reinventing itselfOur story starts in 1993. At that time Bob Kneip had just identified two areas where financial market participants faced needs;The legal obligation to communicate about instruments domiciled in Luxembourg and those distributed across the whole world, and the need for teams and clients to receive training and information via overhead transparencies.The arrival of PowerPoint in 1996 sliced the company’s turnover in half. For Bob this was a defining moment because he was forced into a process of reinvention. He remained loyal to the financial sector and started developing product data leaflets.Then in 2006, when the legal requirement for fund managers to disclose net asset values was lifted, it was once again necessary to reinvent business. KNEIP became a specialist in the management of fund data.

Giving meaning to activityBob Kneip is characterised by his entrepreneurial spirit.The descendant of a 600-year-old milling family, son and nephew of entrepreneurs, his first job consisted of selling restaurant vouchers in Belgium, before becoming an office manager. He then established restaurant vouchers in Luxembourg, and set off for Germany and Austria to continue its development there.On his return to Luxembourg he discovered the concept of financial publicity at IP. Bob developed an action plan and took the plunge as an independent.

His driving force is enjoyment and a passion that he likes to share with team members and clients. His passion for modern and pop art, investments in child welfare and education, and time devoted to his family are all coherent with the man and his path.

Knowing how to listenAside from its past activities, KNEIP is the only company that offers an integrated solution for KIIDs. Moreover, new AIFMD rules will force alternative funds to develop special reports for investors. Bob is convinced that to prevent the recurrence of past mistakes, investors need a long-term perspective with clear and pertinent information that is easily understood.While the UCITS, which have enabled the company to grow, are celebrating their 25th birthday, the KNEIP group is trying harder than ever to minimise the impact and costs of changes in legislation for its clients. If it can continue listening to investors, the fund industry will be able to serve the interests of today's investors and future generations to come. If KNEIP can continue listening to its clients, it will also be able to build a sustainable future serving the interests of the fund industry and the industry as a whole.

IN THE SPACE OF 20 YEARS THE KNEIP GROUP HAS BECOME THE REFERENCE IN LEGAL, REGULATORY AND CONTRACTUAL INFORMATION FOR THE FUND INDUSTRY

AN INTERVIEW WITH BOB KNEIP

LONG STORY

10

© 3

60

Cro

ssm

edia

/C.O

Jean-Marc Goy

11

LUXEMBOURG IOSCO 2013IMPACT, INSIGHT

AN INTERVIEW WITH JEAN GUILL, DIRECTOR GENERAL, AND WITH JEAN-MARC GOY, COUNSEL FOR

INTERNATIONAL AFFAIRS, OF THE COMMISSION DE SURVEILLANCE DU

SECTEUR FINANCIER (CSSF)

Jean Guill

BY JEAN GUILL & JEAN-MARC GOY

What are the important dates on the agenda of the CSSF for 2013?The one event that comes to our mind immediately first and foremost as the main event in 2013, which is not to be missed under any circumstances, is the Annual Conference of the International Organization of Securities Commissions (IOSCO), which will take place at the New Conference Centre in Luxembourg-Kirchberg. Today, IOSCO is recognized as the international standard setter for securities markets. Its membership regulates more than 95% of the world’s securities markets and it is the primary international cooperative forum for securities market regulatory agencies. Its main objective is to establish international standards allowing for the reinforcement of the efficiency and the transparency of securities markets and, thus, for the protection of investors. The Commission de Surveillance du Secteur Financier (CSSF) is proud to be a member of IOSCO since 1991 and this is the first time ever that the IOSCO Annual Conference will take place in Luxembourg. We expect between 600 and 850 participants for this event, which will be a unique opportunity to meet and interact with decision makers of the financial sector and with representatives of supervisory authorities from over 110 jurisdictions from all over the world. The event will take place from 15 to 19 September 2013 and will be open to the public on the afternoon of 18 September and on 19 September 2013. More information can be found at www.iosco2013.lu

© 3

60

Cro

ssm

edia

/C.O

12

LONG STORY

Over recent years, the regulation of the financial sector has become more and more international

Jean Guill

© 3

60

Cro

ssm

edia

/C.O

As regulation becomes more central throughout the industry, so does the role of competent authorites.

THE BOTTOM LINE

The industry is hopeful to repeat the success which Luxembourg had in the field of UCITS

Jean-Marc Goy

What are the challenges and opportunities for the asset management sector in Luxembourg?The Alternative Investment Fund Managers Directive (AIFMD) appears to be a text implying both challenges and opportunities. As this directive contains a number of detailed requirements, the industry will be faced with the challenge of complying at all times with the new rules. At the same time, since the AIFMD is also introducing a passport similar to the passport for undertakings for collective investment in transferable securities (UCITS), the industry is hopeful to repeat the success which Luxembourg had in the field of UCITS, where Luxembourg is today the leading financial centre, in particular regarding cross-border distribution of UCITS.

What are the challenges for the supervisory authorities of the financial sector?Over the last years, the regulation and the supervision of the financial sector has become more and more international, the aim being a more convergent and harmonised approach from supervisory authorities in applying rules that are fundamentally the same in the major financial centres as far as possible. In parallel, the role of international standard setting bodies such as IOSCO, the Basel Committee on Banking Supervision (BCBS), the Financial Stability Board (FSB) and of the EU authorities such as the European Securities and Markets Authorits (ESMA), the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) has increased. This trend will continue in the future, as is illustrated among others by the initiative of the European Commission in view of a banking union with a single supervisory mechanism (SSM) for banks in the euro area. The challenge for national competent authorities is to make every necessary effort to ensure that their views are taken into due consideration. This is particularly true for supervisory authorities from smaller countries with a well developed financial sector.

13

AIFMD TRANSPARENCY REPORTING: TURNING OBLIGATION TO OPPORTUNITY

In our previous article in this magazine, we suggested that the real challenge of the regulatory transparency reporting obligations lies in collecting the data from many disparate sources. We believe that this is still very much true. However it does not stop there.

Indeed, once data is collected by regulators, one could question what they will do with it. Although we have seen in the past that the data collected in the context of some regulations such as the EUSD is not used by the regulators, this may be different for AIFMD.

The fact that ESMA is pushing for uniform file standards in XML and aligned reporting periods suggests that some data consolidation may happen at their end, such as sample checks, installing control mechanisms on data consistency, and using this information for high-level macro-economic analyses.

This could represent for fund management companies a unique opportunity to establish a certain number of logical coherence checks and create data accuracy indicators before the submission of reports. This would not only limit the risk of filing incoherent data files to regulators but useful information to be exploited, and that could serve to enhance fund managers’ own risk management monitoring processes as well as the related data consistency.

Delta comparisons between reports could yield automatic highlighting of major variations. Potential errors could be rectified or explanations of the delta could be stored and used for internal and external justifications in the future. Many other business rules and reports could also be implemented, varying from basic calculations such as top 5 ranking, to more complex such as cross field validations all the way to extremely sophisticated scenarios.

Considering that multiple files from different sources will need to be compiled, the risk of incoherent results is increased as there is no guarantee that different data points will necessarily point to the same underlying raw data.

We all recognise that the regulatory obligations will not stop. Yet more demanding regulations and related rising costs could mean that yesterday’s methods of manufacturing regulatory reports are losing their relevance. The imperatives are maybe now to refine regulation-related product develop-ment approaches and capitalize intelligently on those inevitable investments. Those that do so can create an enduring competitive edge.

BY MARIO MANTRISI

Use regulator-imposed controls as an opportunity to improve your risk monitoring

THE BOTTOM LINE

AIFMD REPORTING

14

Yesterday's methods of manufacturing regulatory reports are losing their relevance.

© K

NE

IP

Mario Mantrisi Chief Strategy and Research

Officer at KNEIP

While some challenges still exist, we remain optimistic about Africa’s future growth.

© 3

60

Cro

ssm

edia

/C.O

Josée-Lynda Denis, CEO Luxembourg

Standard Chartered

RAZIA KHAN IS STANDARD CHARTERED’S HEAD OF AFRICA RESEARCH, A WELL-KNOWN COMMENTATOR ON AFRICAN MARKETS.

TAKING AFRICA’S GROWTH SERIOUSLY

With the global economy in search of new growth champions, Africa stands out. African economies have outperformed for more than a decade, spur-red on by improved policy, greater savings, and gains in financial intermediation. In the decade prior to the global economic crisis, real private-sector credit to GDP doubled in the Sub-Saharan Africa region. This was externally attributed to higher commodity prices but it was in fact the rise of the African consumer that truly characterised this period of outperformance.

However at Standard Chartered, with the benefit of over a hundred years of experience in different African markets, we believe that the growth out-performance experienced recently is different. The fundamental impetus behind this growth remains domestic. Moreover, a number of key trends suggest that it should be sustained in the future.

First, consider demographics. Africa is young, with a rapidly growing population. Although for-mal-sector job creation remains a challenge, this demographic profile should boost Africa’s growth, driving up consumption and asset prices, as well as creating a greater pool of pension savings that can be invested in the region. The scale of Africa’s population growth should also be noted. Nigeria, the region’s most populous economy, is currently ranked 7th in the world by population size. According to UN statistics, by 2035, it could be the 4th most populous country globally.

Second, agriculture also represents a significant opportunity as governments start to take it more seriously. With more Africans currently employed

in agriculture than any other sector, this is where the transformation is most likely to stem from. Contrary to stereotypes, Africa is richer in water resources per capita than Asia or the Middle East. It also boasts a massive 60% of the world’s avai-lable, untapped arable land. Increased investment and greater policy prioritisation should see African agriculture realise the potential growth opportu-nities in the region.

Finally, Africa’s infrastructural deficit has been well documented, which in part explains the low level of intra-regional trade. However investment in infrastructure is gaining ground, thanks to a higher rate of urbanisation. This in turn has driven down the cost per capita, enabling economies of scale. As domestic markets develop and yield curves are extended, greater investment in infras-tructure is likely. More African sovereigns are issuing Eurobonds, and tapping into international capital to finance infrastructure. Additionally, Standard Chartered has pledged over 2bn USD for African energy projects in the next five years, under the Power Africa initiative. The catalysts for a boost in sustained productivity, and a structural transformation of African economies are starting to fall into place.

While some challenges still exist, we remain opti-mistic about Africa’s future growth. An increasing number of African regions will see real GDP growth of 7% or more in the coming decade, effec-tively doubling in size. These countries, including Nigeria, Ghana, Angola, Mozambique, Ivory Coast, Zambia, Uganda, Tanzania and perhaps even Kenya, represent a mix of opportunities, as well as risks. But with growth outperformance expected for each of them, it is time to take Africa’s growth seriously.

BY JOSÉE-LYNDA DENIS AND RAZIA KAHN

ANALYSIS

Africa is poised to continue its marked growth to becoming an important player in the global investment arena

THE BOTTOM LINE

17

MUSICIAN, POLITICAL ACTIVIST AND ENTREPRENEUR, BOB GELDOF IS ALSO CHAIRMAN OF THE 8 MILES PRIVATE EQUITY FUND. HE SPOKE AT FUND FORUM INTERNATIONAL 2013 IN MONACO.

SIR BOB GELDOF: GO SOUTH!

8 milesThere is a gap between the reality of Africa and our perception of it. Africa seems distant, different, but in fact the physical gap between the continents is only 8 miles at Gibraltar. Sir Bob Geldof was first involved with Africa through fund raising concerts. In 1995, the “Band Aid Trust” was created, which the rock star still chairs today. But his approach took a radical change in 2005, when Geldof got involved at the G8 in Gleneagles: “You can raise millions with concerts, but you get billions every year if you flick the political button”. Together with another Irish singer, Bono, Sir Geldof got support from Kofi Anan, Ban Ki Moon, and the United Nations. The 8 miles fund was created. The Dark Continent?“People call Africa the dark continent? It is more like a luminous continent. The darkness is inside us!”. When investors worry about corruption, Sir Bob reminds them that it is nothing compared to the level it is in China. The economic figures are staggering: “Since 2001, the average economic growth across the continent is 6% per annum”.  For the rock star instability comes from asymmetry. Africa has a population of 1 billion people, 50% of which are aged under 17. They want health, education, growth, an iPad... It is the fastest growing middle class in the world. “One evening I saw a bicycle arrive in a village. I thought that it was someone sharpening knifes for the population. Instead, people came out with their laptops to send and receive emails from all over the world!”.

 Go South!Facing an audience of bankers, Geldof made his point: “If you are an investor and you do not invest in Africa today, you are not doing your job”. For those who were still not convinced, he reminded them that Unilever Africa brings better return than Unilever Europe, that 60% of the last arable land is in Africa, that China already heavily invests in Africa and that overall, “where else is there to go?”. Sir Bob attended the conference to raise money: “I’m not a Private Equity guy but I get it. With the best in your field, I could get the best PE people together. And don’t worry, I have access to media”. At a time where so many people want to make an impact with their investment Sir Bob Geldof surely made a strong impact

on his audience: time will tell how many millions he raised, but he surely taught everyone in the room the art of performing, concluding with a definitive “Go South!” before vanishing from the stage.

Africa will be the biggest place to invest in the 21st

century

18

ROCKSTARPRESENTATION HIGHLIGHTS

Africa's growth is a reality, it's happening. Now is the time to get involved.

THE BOTTOM LINE

You can raise millions with concerts, but you get billions every year if you flick the political button

© D

R

© D

R

2013’S FUND FORUM INTERNATIONAL SAW THE NOW LEGENDARY WHITE NIGHT COCKTAIL TAKE OVER MONACO’S EXCLUSIVE LIFE CLUB. ALMOST 600 DELEGATES ENJOYED A NIGHT OF GREAT FOOD, COLD DRINKS AND FUND INDUSTRY INSPIRED MUSIC THE DERIVATIVES.

CLIENTS CRAVE TECHNOLOGY-LED ENGAGEMENT

Solution-oriented to the clients’ needsAs fund choice grows, asset managers must find innovative ways to meet client needs. Whether it’s a portal that gives secure mobile access to performance, interactive charting that lets users customize reports, or 24/7 access to web resources that help educate and inform, tech-nology is bridging the gulf between asset mana-gers and investors.

Transparency is the keyBridging that gap by offering protection to investors is also the goal of regulation. New regulation seeks to forge better connections between investors, who crave more transpa-rency and advice they can trust, and asset managers who’ve historically chosen to remain opaque. Sadly, those efforts rarely receive a warm welcome. Often, they prompt a wave of spending from firms who see more value in lob-bying lawmakers than they do in embracing the real spirit of regulation, which is about much more than simply compliance.

A new different approachViewed positively, new regulatory requirements have created a “reboot” moment that offers asset managers the chance to completely reset fund marketing and truly engage the clients they serve. As Rodney Williams writes in an ALFI report, “regulatory, fiscal and environmental headwinds cannot be ignored but equally they should not be seen as a barrier to adopting an Action Agenda. For every Euro spent on lob-bying, fund groups should consider an equal budget allocation to marketing and product ini-tiatives designed to build engagement.”1

US investors favour technology-based servicesIncreasingly, those initiatives must be web-focused as 57% of US investors say they would move assets to firms with more technology-based services and 71% of US investors trust their fellow investors more than their advisor.2 Offering online education to inform investors or creating portals for peer-to-peer knowledge sha-ring can create a loyal and engaged community of investors. With loyal affluent customers worth nearly three and a half times more than ave-rage3, using digital technology to bridge the gap between clients and asset managers holds the key to a new model of wealth management that is both lucrative and sustainable.

BY MASH PATEL

SPOTLIGHT

20

1. ALFI / Rodney Williams, Beyond 10%. The case for enlarging the pool of retail investors in Europe’s investment funds

2. Wealth Management Study, Cisco Internet Business Solutions Group (IBSG), 2012

3. Bain & Co., Winning in Wealth Management

Client expectations have risen but technology can help asset and wealth managers close the gap

THE BOTTOM LINE

RECENT SIGNS ARE GOOD FOR WEALTH MANAGEMENT. NET NEW MONEY IS UP AND INVESTOR CONFIDENCE IS BACK. BUT TOO MUCH WATER HAS PASSED UNDER THE BRIDGE FOR A RETURN TO THE OLD DAYS. YES, CLIENTS ARE MORE POSITIVE BUT THE TURMOIL HAS LEFT THEM CAUTIOUS. MEANWHILE, DIGITAL TECHNOLOGY CONTINUES TO HAND POWER TO CONSUMERS, CREATING HIGHER CLIENT EXPECTATIONS.

Technology is bridging the gulf between asset managers and investors

© D

R

Mash Patel – CEO of Kurtosys

CLIENTS CRAVE TECHNOLOGY-LED ENGAGEMENT

CORPORATE SOCIAL RESPONSIBILITY IS STILL SOMETIMES VIEWED SKEPTICALLY, AS AN ELABORATE PR EXERCISE: SOMETHING COMPANIES ENGAGE IN BECAUSE THEY SHOULD, NOT NECESSARILY BECAUSE THEY TRULY BELIEVE IN THE CAUSE. HOWEVER SOME OF THE WORLD’S LARGEST MULTINATIONALS ARE SHINING BEACONS FOR CSR DONE RIGHT.

CSR: IT’S GOOD BUSINESS

Earlier this year Forbes ranked Microsoft, Google and The Walt Disney Company as the top three players in a poll of companies with the best CSR reputations. With 42% of how people feel about a company stems from their perceptions of a firm's CSR activities1, it’s not difficult to see why it makes sense.

Committing to a well thought out program benefits more than just the chosen benefi-ciary. Client retention is increased, positive publicity is generated, and energy and ope-rating costs are reduced. Employees are motivated by participation in CSR activities that they appreciate to be for a greater good, and that are more than just a statement on a com-pany website. Clients are happy to find suppliers that share similar beliefs or behaviour. A client com-mitted to reducing their carbon footprint will look favourably on a supplier who does the same.

But be warned: stakeholders quickly spot any window-dressing, and companies who are seen as “green-washing” can be viewed more negatively than those without any CSR program. Credibility is key and can only be achieved with coherent, responsible social, economic and ecological behaviour.

CSR has long been integral to our consciousness at KNEIP. In 1993 CSR was not the buzzword it is today. We may not have called what we did CSR, but our efforts were real nonetheless. As we celebrate our 20th year in business, that part of our consciousness continues to grow, with our founder and CEO, Bob Kneip, being the bas-tion of our CSR activity.

In 2004 we increased and formalised our CSR efforts, as well as the resources we allo-cated to it. An internal survey determined where our efforts and resources would be best directed, and as a result, a dedicated team was set-up to coordinate, facilitate and promote our combined company efforts, with a focus on education and children’s aid.

We also strive to instill an attitude of socially responsible behaviour internally, and attempt to foster best practices externally.

Reducing our carbon footprint, and our role as a founding member of IMS Luxembourg — an association that offers support to members in their CSR programs — are clear manifestations of this. We are proud to say that KNEIP was ins-trumental in the creation of the

National Diversity Charter, maintained by IMS Luxembourg.

CSR is intrinsically linked to our corporate values: we care for the world we live in, we work with our environment in mind and we respect the community in which we operate. It is imperative that our presence enhances the communities in which we are present, while contributing to a better environment for the generations to follow.

BY DIANE MULLER - KNEIP

CSR

Credibility is key and can only be achieved with coherent, responsible social, economic and ecological behaviour.

THE BOTTOM LINE

© D

R

23

1. Reputation Institute, 2013

42% of how people feel about a company

stems from their perceptions of a firm's

CSR activities

Thommen: When I first saw the painting I recognised Billy Idol, whose music I enjoy. How did you come to paint him?OLLL: I chose Billy Idol as a subject because he was just that, an idol, to me as a youth. He was blond, combative, and the painting captures that physical element – he could be a boxer. I find conflict very positive, especially in a workplace setting, because it’s motivating, although it wouldn’t be appropriate in someone’s home.

Thommen: He displays a certain power, he's almost angry.OLLL: He's not aggressive – combative is a better description.

Thommen: I'd say there is a bit of aggression there. The picture was painted on the ground. Why didn't you paint it on the wall?OLLL: I work flat on the ground because it helps you keep the scale and dimensions in your head and your arms, not in your view. Also, you can’t work with very liquid materials in a vertical format. I mix my own paints – you won’t find them in any shop. The grey is very liquid ink to make it smooth, then I fill it out using a syringe. It’s very precise, meticulous work, and one you’ve started you can’t stop until it’s finished.

24

WHEN BRUSH MEETS BUSINESS

THE ARTIST OLLL, CREATOR OF THE PAINTINGS OF BILLY IDOL, PASCALE LIGHT AND PAUL NEWMAN ON SHOW IN KNEIP’S OFFICES, DISCUSSES WITH CLIENT MARTIN THOMMEN HIS TECHNIQUE, PHILOSOPHY, AND THE ROLE OF ART IN THE WORKPLACE.

"CONFLICT CAN BE MOTIVATING, especially in the workplace”

Thommen: The painting of Pascale looks as if it is made of metal.OLLL: It’s silver, very close to metal. Although I do know her, the painting is based on a photo. I pay particular attention to contrast.

Thommen: The best thing about the painting is her eyes - I found myself transfixed by them.OLLL: The eyes are very striking – I reversed out the retina, making it black instead of white. You can’t escape that gaze.

Thommen: She seems very happy and positive. Your painting actually highlights her better than the original photo. Does the painting of Paul Newman use a different technique?

A CONVERSATION BETWEEN ARTIST AND BUSINESSMANOLLL AND MARTIN THOMMEN, MANAGING DIRECTOR UBS

Displaying paintings in the workplace enhances both art and business

OLLL

© 3

60

Cro

ssm

edia

/C.O

25

OLLL: Yes, my technique varies because I’m always interested in what’s new and innovative. I've also just done a portrait of Hitler, not because I like him, but because it’s an intelligent form of provocation. I’ve also painted Jesus sitting in an electric chair.

Thommen: Not being an art professional or a collector makes access more difficult - you have to go to a museum or to a private gallery, it always seems hidden away. By contrast, Bob likes to share art with his staff and his clients. It would be great if that happened more often, although I understand the security and insurance issues.OLLL: It’s very rare for private collectors to give people access to their paintings, which

makes Bob’s readiness to put these works on show in the office all the more unusual. But for people who enjoy art it can help them be productive and lower their stress levels.

Thommen: The other thing about paintings is that they are also an attractive investment from a psychological point of view. If you have investments in shares that lose value, it makes you unhappy, but that never happens with art.

Emotion through paintings, like happiness in one's investments, is best found in something you're passionate about.

THE BOTTOM LINE

With the AIFMD deadline of July 22 recently passed, ESMA has clearly outlined the information that must be made available in the transparency reporting: dis-closure to investors’ provisions of the AIFM Directive. What they have not done however, is provide any outline as to where or how this information should be made available, leaving asset managers to decide on a suitable vehicle for this information for themselves.

Through our relationships, and experience with the European Economic Area’s key regulators, we have garnered the following information on the require-ments of member states for non-UCITS KIIDs.

Almost 50% of EEA countries already require a KIID for their non-UCITS funds, mainly when non-UCITS are marketed to retail investors. Therefore it would seem obvious that this could be a suitable vehicle for distributing the disclosure to investors’ information, wh i le s a t i s f y i ng a l l AIFMD requirements.

While finding the correct deli-very method for the disclosure of the information should cer-tainly not be underestimated, asset managers shouldn’t have to waste valuable time and resources reinventing the wheel.

However it should be noted that, in the pre-AIFMD environment, countries set forth guidelines surrounding the production of KIIDs for alternative funds. Now that AIFMD is here, regulators have said that these KIIDs must also comply with AIFMD’s provisions.

THE TOOLBOX

CAPITALISING ON UCITS FOR KIID REQUIREMENTS

26

EEA Country Non-UCITS KIID Conditions

Austria

Belgium For public fund investing in financial instruments and liquidity

Bulgaria

Cyprus

Czech Republic

Denmark For AIFs sold to retail investors

Estonia

Finland

France For "OPCVM non coordonnés, OPCVM d'épargne salariale, FCPR, FCPI, FIP agréés, OPCI"

Germany For the "Publikumsfonds"

Greece

Hungary For public open-end/closed-end funds

Iceland Icelandic language not required for Institutional investors

Republic of Ireland

Italy For retail funds

Latvia

Liechtenstein For retail funds

Lithuania Simplified prospectus

Luxembourg

Malta For non-UCITS retail funds

The Netherlands For retail funds

Norway Derogations may be granted

Poland For specialised open-ended investment funds

Portugal

Romania

Slovakia For public specialised common funds

Slovenia

Spain

Sweden

UK OptionalNon-UCITS Retail Scheme (NURS) can opt to produce a KIID

This content above is for information purposes only and should not be conside-red as legal advice.

YOURINDEPENDENT

FUND SERVICE PARTNER IN

LUXEMBOURG

// Management Company Services

// Risk Management Services

// Investment Compliance Monitoring

// Fund Governance Solutions

// Substance Services

// Corporate Secretarial Services

// Domiciliary Services

// Independent Board Directors

// AIF and AIFM Services

CONTACT USTel: +352 26 00 21 1Fax: +352 26 00 21 499Email: info@mdo-services.com

info@mdo-manco.cominfo@thedirectorsoffice.com

MDO Services S.A.MDO Management Company S.A.The Directors’ Office S.A.21st Century Building19, rue de BitbourgL-1273 Luxembourg

Still guiding the way for global business. ft.com/125