FDEF Researchers receive over 1 million euros in FNR CORE funding

The Faculty of Law, Economics and Finance is proud to announce that two FNR CORE projects coordinated by FDEF researchers have been accepted and will begin in 2025.

The overall amount of funding obtained by the researchers amounts to approximately EUR 1.2M.

HFVALUE – Hedge Value Creation And Capital Allocation In The Hedge Fund Industry

Principal Investigator: Prof. Laurent Barras

This project, led by Prof. Laurent Barras from the Department of Finance has the ambitious goal to develop a new approach to estimate value distribution across the entire hedge fund population. Prof. Barras and his team will address a gap in existing literature which up until now has focused mainly on hedge fund performance evaluation, without any real investigation into whether or not hedge funds actually create value.

This large-scale approach will depart from previous methodologies by accounting for specific features of hedge fund returns, in particular, the large number of mechanical strategies that they follow. The researchers will will conduct static and dynamic analyses to identify funds that create value, determine if the value creation is scalable or not, examine bargaining power by measuring how value creation is split between investors and managers, and look at fund performance over time. The researchers will also compare value creation in mutual funds to hedge funds and put theories of active management to the test.

This research proposal, exploring the intersection of hedge fund value creation and data-driven modelling, aligns seamlessly with Luxembourg’s national priorities of fostering a knowledge-driven data economy and facilitating industrial and service transformation. More generally, this project provides an evaluation of the ability of the asset management industry to produce information, provide liquidity, and improve economic outcomes.

“A key priority of the government is to create high-skilled jobs in asset management. Our project will allow us to quantify the dollar value that these jobs create. As a result, it can provide additional arguments for Luxembourg to solidify its status as a premier financial center in Europe and in the world. The results of this project will also be informative for the regulator, the financial asset management industries, and finance students,” explains Prof. Barras.

The three-year project has received a grant of EUR 402,000 within the Industrial and service Transformation category of the national research priorities.

GREENCONS – Environmental Constitution for Europe – Understanding Environmental Sustainability as a New Part Of The EU’s Economic-Constitutional Model

Principal Investigator: Dr. Klaus Tuori

GREENCONS is a novel multidisciplinary research project that analyses how environmental sustainability as a broad policy objective has affected (and eventually transformed) the constitutional framework within which the European Union operates. Dr. Klaus Tuori, research scientist within the Department of Law at the University of Luxembourg, will be leading the GREENCONS project which lies under the Sustainable and Responsible Development national research priority set forth by the FNR.

The project is designed to determine the economic, legal, and environmental rationales behind measures adopted in the core areas of EU economic integration: internal market, monetary policy and fiscal policy. The project aspires to show how concerns about the environment have permeated an area traditionally characterised mainly by economic rationality.

Dr. Tuori and his team will use a methodology combining theoretical research and doctrinal analysis of EU legal and policy actions as well as structured interviews with relevant institutional actors. The resulting empirical data will show how legal means can make economic and environmental rationales effective, but it could also reveal tensions, overlaps and gaps.

“Environmental sustainability has become a buzz word and aim in most areas in our society, but is it a constitutional objective in EU law? I have studied how other constitutional objectives, such as creating an internal market or price and later financial stability have concretely directed policy-making and even courts. Now, I hope to analyse whether the same could be happening with environmental sustainability – and if not – what would need to change”, says the project lead Tuori.

Going forward, the project’s outcomes could facilitate EU institutions and courts in using the environmental sustainability objective in more coherent, efficient and hopefully fairer ways. Finally, the novel concept of environmental constitution has the potential to become a scientific template for a new research agenda. The three-year project, which has been awarded a grant of EUR 753,OOO, began in March 2025.