With 3,741.33 billion EUR of assets under management as at 31 December 2016, an annual growth of 6.7%, Luxembourg reports another new record of assets under management in investment funds domiciled in Luxembourg. Luxembourg is well-known as a UCITS fund hub, however since the introduction of the Alternative Investment Fund Managers Directive (AIFMD), the Association of the Luxembourg Fund Industry (ALFI) has seen increasing interest from asset managers of Private Equity, Real Estate and Hedge funds.
Commenting on the figures, Denise Voss, Chairman of ALFI, said: “These record figures and the strong net sales that we continue to see demonstrate that Luxembourg remains a preferred global fund hub. We were particularly pleased to receive recognition of this by being awarded “Best Centre for Fund Administration” in the Investment Week Fund Services Awards 2016.
She continued: “2016 was a challenging year in many respects. First the UK vote to exit the EU has brought uncertainty to cross-border distribution in Europe, with the possible loss of both fund and fund manager passports for UK asset managers. Second we have seen the threat of US protectionism with the election of Donald Trump.
“However, these challenges can bring opportunities. UK asset managers, and those asset managers from other non-EU countries who currently use the UK to access investors in Europe will, once the UK leaves Europe, have to domicile their funds in an EU member country. Luxembourg continues to be one of the most sought after EU countries for setting up investment funds and fund management companies and clearly this will continue throughout the Brexit process. We have already had confirmation that M&G, one of the largest UK asset management firms, is seeking permission from the Luxembourg authorities to launch a new UCITS fund. We understand other firms will make public similar plans in the next weeks and months.
“We are also seeing opportunities brought by digitalisation and the growth of fintech companies. Online investment is slowly but surely continuing to grow, robo advice is developing and, as a result, we have to change our way of working, not only to facilitate these new technologies and distribution platforms but to take advantage of the efficiencies digital technologies can offer our industry.”
ALFI has continued to support the industry in the face of all this change, by continuing to promote the Luxembourg domicile and global fund hub. In 2017 ALFI has another ambitious schedule of roadshows, in Asia, Australia, the USA and Latin America. ALFI is also setting up a working group which will promote increased collaboration and closer relationships between the fund management centres in Luxembourg and Singapore. In Australia, ALFI has successfully negotiated an exemption, for financial services providers regulated by the CSSF, from the obligation to hold an Australian license to provide financial services in Australia. This relief will enable Australia’s institutional investors, including superannuation funds, to get easier access to Luxembourg UCITS.
ALFI will continue to focus on product innovation to attract more asset managers to Luxembourg by introducing new products like the RAIF, the Reserved Alternative Investment Fund, as well as focussing on the SRI sector by promoting impact investing and climate finance funds.
Ms Voss concludes: “Looking forward, we continue to see challenges and opportunities, driven by geopolitical changes, technological developments and regulatory initiatives, but as always Luxembourg will adapt its products and services to ensure that it continues to be the preferred choice for cross-border asset managers and for investors in Luxembourg funds, who are resident in over 70 countries around the world.”