Concluding remarks

Cross-border investors retreated from funds on an unprecedented scale in 2022, after being buffeted by an array of headwinds that included geopolitical tensions, the war in Ukraine, soaring energy prices, spiraling inflation, and rising interest rates.

Nonetheless, the losses tell more than one positive story. Firstly, they point to the incredible industry growth rates that have taken long-term AUM from €1.6trn before the financial crisis to €6.7trn in 2021. A larger asset base naturally leads to bigger losses in a crisis – but at 4.3% of AUM, 2022’s drawdown amounts to just half 2008’s redemption rate in relative terms. More remarkably, 2022 is only the second year of net cross-border losses on record, underlining the overall stability and desirability of these investments.

This report shows some of the idiosyncrasies of the cross-border space, a complex industry that stretches beyond Europe and notably into Asia. But it also highlights how funds here are subject to many of the same pressures as in other parts of the funds business – ESG, thematic and passive are global trends that play out just as visibly on the cross-border stage.

These pages establish a snapshot of the industry as it is today; looking further into the future brings its own difficulties – the only constant being change, as they say. Nevertheless, there are a few safe predictions that can be made: buoyant demand from investors will see industry growth resume; passive investment will play an ever-greater role; and in the face of each new challenge, managers will be able to rely on the support and expertise of Luxembourg’s vibrant fund ecosystem.

Download the publication from last year.

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