Luxembourg Domiciled Funds Reach Record EUR 2,742.208 billion

18 June 2014 – According to the annual report of the Association of the Luxembourg Fund Industry (ALFI), issued today, the positive growth trends of 2013 continued into 2014, with assets under management for Luxembourg domiciled investment funds reaching a new record of EUR 2,742.208 billion at the close of April 2014.

During the first quarter of 2014 assets under management rose by EUR 94 billion, driven by EUR 68 billion of net sales. In 2013 Luxembourg attracted inflows of EUR 193 billion, representing 47% share of total European net sales, and 129 new fund promoters selected Luxembourg as their fund domicile of which 31% were outside of the EU.

Despite Luxembourg’s success, ALFI’s Chairman, Marc Saluzzi believes that the overall fund industry environment remains challenging.  He explains:  “The threat of a Financial Transaction Tax (FTT), the EU hesitations on Money Market Funds, the extension of the Markets in Financial Instrument Directive (MiFID II) still create a level of uncertainty for our industry and its investors. In addition, an increasing number of jurisdictions are striving to emulate the Luxembourg model and compete with our products in the cross-border space.”

The report outlines ALFI’s new initiative to improve Luxembourg’s service footprint and remain Europe’s leading investment fund centre. The Footprint project, a survey conducted among international fund managers and service providers operating out of Luxembourg, looks at how they intend to develop their service footprint both in Luxembourg and beyond.

Commenting on the initial outcome of the survey, Mr Saluzzi said: “The initial outcome is positive, with all interviewees confirming that Luxembourg will remain the cornerstone of their global fund business.  One major growth opportunity that we are increasingly looking into is to also serve the non-Luxembourg business of fund managers by leveraging the Luxembourg infrastructure. The trend in this regard is encouraging.”

In its annual report, the Association is proud to report upon great achievements, inter alia:

• 20 ALFI position papers and comments on current legislative and regulatory proposals.
• Publication of the report “Beyond 10%: the case for enlarging the pool of retail investors in Europe’s investment funds,””
• Record  number of 1,504 members involved in 133 ALFI Technical Committees and Working Groups.
• 3,800 participants at 8 ALFI international roadshows and seminars held in 13 cities in 10 countries.
• Launch of an innovative promotional film shown in Luxembourg cinemas and on television at the occasion of ALFI’s anniversary with the aim of raising awareness of the Luxembourg investment fund sector.
• Launch of ALFI live webinars in collaboration with NICSA.

The Annual Report furthermore sets out highlights of 2013-2014, which include:

• The Luxembourg Parliament adopted the law transposing the Alternative Investment Fund Manager Directive (AIFMD) into Luxembourg law on 12 July 2013. At the beginning of June 2014, a total of 203 applications had been received by the CSSF, 76 of which have been approved so far.
• With the AIFMD implementation, the Luxemburg Parliament introduced a new form of limited partnership into Luxembourg law, the société en commandite spéciale (special limited partnership or SCSp).
• The Luxembourg regulator CSSF authorised the first Renminbi Qualified Foreign Institutional Investor (RQFII) fund under the UCITS scheme in November 2013.
• The Government of the United States of America and the Government of the Grand Duchy of Luxembourg signed an intergovernmental agreement to improve international tax compliance and to implement the Foreign Account Tax Compliance Act (FATCA) on 28 March 2014.
• The Luxembourg Fund Labelling Agency (LuxFLAG) launched the LuxFLAG ESG Label that will be granted to investment funds which meet specific criteria related to their respect of Environment, Social and Governance objectives in May 2014.
• In May 2014, the CSSF has recognized the classification of the China Interbank Bond Market as a possible regulated market for the purpose of the UCITS regulations.

Mr Saluzzi concludes: “Considering the achievements of our fund centre over the last three decades, I am confident that together we can overcome the challenges to ensure that Luxembourg remains the leading global fund distribution and servicing platform.”

The Annual Report 2013-2014 can be downloaded here.