Luxembourg has seen 13.3 percent growth in assets under management in the last year, according to the Association of the Luxembourg Fund Industry (ALFI).
As of 31 December 2015, €3.5 trillion in assets under management was domiciled in Luxembourg, 13.3 percent more than at the same time in 2014.
At the end of November 2015, Luxembourg accounted for 42.4 percent of all net investment fund sales, with 3,878 investment funds domiciled in the jurisdiction.
Investment funds domiciled in Luxembourg are initiated mainly by US asset managers, which have net assets under management of €759.8 billion, followed by the UK, which has €581.5 billion.
Luxembourg has 211 authorised alternative investment fund managers (AIFMs), 626 registered AIFMs and 950 limited partnerships.
According to ALFI, 2015 also saw developments for Luxembourg as a financial centre for renminbi (RMB)-denominated investment funds. Several Chinese assets managers launched investment funds in Europe, choosing Luxembourg as the domicile for their funds.
In 2014, Luxembourg UCITS were given permission to participate in the Hong Kong-Shanghai Stock Connect, and in 2015, 81 Luxembourg-domiciled investment funds were authorised to use the facility for investing in China A-shares listed on the Shanghai stock exchange.
Luxembourg was also granted an RMB RQFII quota of RMB 50 billion (€6.8 billion) in April 2015. ICBC Europe and Bank of China in Luxembourg have been the first institutions to benefit from the programme, so far.
Denise Voss, chair of ALFI, said: “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.”
She added: “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.”
ALFI suggested that the Capital Markets Union could offer growth opportunities for the industry, allowing investment funds to contribute to overall economic growth, for example, through helping to resolve issues around retirement funding, or financing of innovation and infrastructure.
However, challenges remain around the increased competition between financial centres, the uncertain economic environment and the high volatility of capital markets, meaning that continued and steady growth is uncertain.
The association also highlighted technology as a potential catalyst for growth, but also as something that could change the way investors interact with the asset management industry. Regulation also continues to pose a challenge for the industry.
Voss said: "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."
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