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LUXEMBOURG RETAINS POSITION AS THE LEADING INVESTMENT FUND DOMICILE IN EUROPE

- Press releases

With 3,506.2 billion EUR of assets under management as at 31 December 2015, Luxembourg retains its position as the leading investment fund domicile in Europe, growing by 13.29% last year. The number of investment funds stood at 3,878. As at the end of November, Luxembourg accounted for 42.43% of all net sales in Europe.

With 3,506.2 billion EUR of assets under management as at 31 December 2015, Luxembourg retains its position as the leading investment fund domicile in Europe, growing by 13.29% last year. The number of investment funds stood at 3,878. As at the end of November, Luxembourg accounted for 42.43% of all net sales in Europe.

Investment funds domiciled in Luxembourg and initiated by US and UK asset managers represent the 1st and 2nd largest net assets under management, namely EUR 759.8 billion and EUR 581.5 billion, respectively, at the end of 2015.

Luxembourg is also increasingly recognised as a prominent hub for alternative investment fund managers with 211 authorised AIFMs, 626 registered AIFMs and 950 limited partnerships. For real estate and private equity funds, Luxembourg is leading the way in Europe.

Denise Voss, Chairman of ALFI, comments: “The high net sales that we continue to see demonstrate that the Luxembourg investment fund product remains a preferred choice for the international investor. Likewise, fund promoters from 69 countries around the world continue to use Luxembourg as their platform for marketing their funds internationally.”

2015 also marked further developments with the gradually opening Chinese market, with Luxembourg remaining Europe's leading financial centre for RMB denominated investment funds, demonstrated by the fact that:

  • Chinese asset managers launched investment funds in Europe by selecting Luxembourg as the domicile for their funds, including: Harvest Fund Management, CSOP Asset Management (China Southern AM), China AMC, ARC China, Oriental Patron, Guotai Junan, BOCOM Schroders, GF International, China Universal and E-Fund.
  • Luxembourg UCITS received permission to participate in the Hong Kong-Shanghai Stock Connect scheme as early as 2014 and, by 2015, 81 Luxembourg domiciled investment funds were  authorised by the CSSF to take advantage of the facility (alongside QFII and RQFII) to invest in China A-shares listed on the Shanghai stock exchange.
  • In April 2015, the People's Bank of China announced the granting of a 50 billion RMB RQFII quota to Luxembourg. ICBC Europe and Bank of China (Luxembourg) SA are the first financial institutions to have benefited from this program in the amount of 4 and 2 billion RMB, respectively.

Although further growth opportunities for the industry exist, there is also a need for caution, for a number of reasons. The Capital Markets Union (CMU) is very positive for the asset management community as CMU can leverage the potential of investment funds to contribute to overall economic growth in a number of ways. For example, investment funds can help resolve long-term issues like retirement funding and the financing of innovation and infrastructure. In addition, the newly introduced ELTIFs play an important role in this context, as does the Luxembourg ‘Reserved Alternative Investment Fund’ which will provide a timely additional and useful alternative investment fund regime.

However, several factors, including increased competition between financial centers, the uncertain economic environment and the current high volatility of capital markets mean that continued steady growth is far from certain.

“In order to sustain the sector’s development, ALFI will continue to communicate to its stakeholders – including the general public - the essential role that investment funds play in creating jobs and sustainable growth by channelling capital into the economy”, says Denise Voss.

Another factor that is likely to present growth potential for the industry is technology. At the same time technology and big data can also be disruptive forces, as they may fundamentally change the way investors interact with the asset management industry. Asset managers will require support to develop new business models and ALFI has therefore launched the ALFI FinTech Forum to spread digital know-how within its asset management community and to focus on practical developments that will help the Luxembourg asset management centre to thrive, both today and in the future.

Finally, the pace of regulation has been very intense over the last few years. Although each individual piece of regulation is founded on the good intention of protecting the investor, when added together they can not only create a compliance challenge, but also lead to additional costs for companies and, in turn, their clients. Going forward, ALFI will continue to engage pro-actively with national and international stakeholders to promote ‘better’ rather than ‘more’ regulation.

Denise Voss concludes: "The overall environment in which the asset management industry evolves has rarely been as diverse as today. If some recent developments and trends clearly have the potential to stimulate the sector, others are more likely to have a negative impact. However, our industry players’ proven capacity to adapt to a rapidly changing environment and the fact that Luxembourg funds are distributed on such a large scale around the world lead me to believe that our industry can continue to progress in the coming years."

 

Download the press release in English and French.

Updated on 03/02/16
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