Unlocking Opportunities with Active ETFs and Active ETF Share Classes

• As the biggest hub of actively managed funds and the second largest ETF domicile in Europe, Luxembourg has embraced the rise of active ETFs and active ETF share classes. It has introduced a number of measures to make the launch of (active) ETFs and active ETF share classes more attractive.
• Active ETF share classes offer managers the possibility to expand traditional product offerings, enabling investors to access established strategies with the added benefits of an ETF wrapper.

Recent Luxembourg regulatory developments

Over the past few months, the Luxembourg investment fund industry has been collaborating closely with legislators and regulators to shape a number of initiatives aimed at enhancing Luxembourg’s attractiveness for ETFs.

• On 11 December 2024, the Luxembourg parliament endorsed the bill of law 8414 exempting active ETFs from subscription tax, starting from 2025.

The new law extends the subscription tax exemption currently applicable to passive ETFs to active ETFs.

• On 19 December 2024, the CSSF published an FAQ providing for the possibility to defer the disclosure of an active ETF portfolio composition. This information is required to be published at least on a monthly basis, with a maximum time lag of one month.

The new transparency regime represents a safe harbour for actively managed ETF strategies.

• Efficient approval process of ETF products has been implemented.

Jean-Marc Goy, Chairperson of ALFI, commented: “The new transparency and tax regime applicable to Luxembourg domiciled ETFs provides asset managers with a uniquely attractive framework in Europe. The active ETF market continues to grow rapidly, and Luxembourg, Europe’s largest cross-border investment fund domicile, is well-positioned to capitalise on this momentum.”

Corinne Lamesch, Deputy CEO, General Counsel of ALFI added: “Luxembourg has a proven track record of launching active ETF share classes within existing UCITS funds. By adding active ETF share classes into tested Luxembourg active strategies, asset managers can diversify their distribution channels and expand their global market reach.”

Other takeaways are:

• ALFI ETF flyer: ALFI has published a flyer highlighting Luxembourg’s key advantages as ETF domicile.
• ALFI ETF Q&A: ALFI will soon make available to its members an ETF best practice Q&A outlining the newly applicable framework.

Download the ETF flyer.

ENDS

For more information, please contact:

Peregrine Communications

ALFI@peregrinecommunications.com

ALFI

Luis Salerno

ALFI Head of Communications Luis.Salerno@alfi.lu