Luxembourg Still The Favourite Investment Fund Domicile In Europe – ALFI

Amisha Mehta

5 February 2016

Luxembourg held onto its position as Europe's top investment fund domicile, growing by 13 per cent in 2015 to €3.5 trillion of assets under management, according to the Association of the Luxembourg Fund Industry.

Investment funds domiciled in the country and initiated by US and UK asset managers accounted for the first and second largest groups in terms of net assets under management, with €759.8 billion and €581.5 billion respectively at the end of the year. The number of investment funds in Luxembourg stood at 3,878.

Luxembourg was particularly popular among alternative investment fund managers, with 211 authorised AIFMs, 626 registered AIFMs and 950 limited partnerships. The jurisdiction also came out as the European leader for real estate and private equity funds.

“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,” said Denise Voss, chairman of ALFI.

It was an important year with the opening up of the Chinese market, which saw a host of Chinese asset managers launch investment funds in Europe, choosing Luxembourg as a domicile, ALFI noted. In April, the People's Bank of China granted a renminbi qualified foreign institutional investor quota of RMB50 billion to Luxembourg. ICBC Europe and Bank of China became the first financial institutions to benefit from the programme, with allocations of RMB4 billion and RMB2 billion respectively.

Despite the growth, ALFI highlighted a need for caution, pointing towards increased competition between financial centres, the uncertain economic environment as well as current capital market volatility.

“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,” said Voss.

“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.”