RAIFs and Limited Partnerships: Rise in Popularity
New findings from the 25th edition of the Monterey Insight Luxembourg Fund Report, as compiled by Monterey Insight, the independent fund research company, reveal the market shares of all services providers in Luxembourg’s funds industry.
Please note all findings below include regulated funds (SIFs, UCITS/UCIs and SICARs) unless indicated otherwise.
Total Net Assets decline
The total net assets for regulated collective investment funds domiciled in Luxembourg decreased for the first time since 2011, from US$5,022.2bn to US$4,680.0bn in 2018. This represents a decrease of 6.8% in US Dollar or equates to a EURO fall of 2.1% from €4,182.5bn in 2017 to €4,094.0bn in 2018.
However, when you take a closer look, products such as SICARs and SIFs have both actually increased since 2018. As of the total net assets as at December 2018, SICARs amount to a total market size of US$61.3bn with 405 sub-funds (up from US$54.9bn and 397 sub-funds as at December 2017) and Specialised Investment Funds (SIFs) contributed US$609.3bn of assets with 3,452 sub-funds (up from US$581.6bn with 3,353 sub-funds).
The overall number of regulated sub-funds reached 14,903, a negligible increase of 2.0% from the 14,612 of the previous year.
In addition to the regulated structures, Reserved Alternative Investment Fund (RAIF) and Luxembourg Limited Partnerships enjoyed a great increase and proved to be popular products for investment. Information collected on RAIFs topped up the total net assets by US$47.8bn with 590 sub-funds while LuxLPs reached US$91.3bn with 878 structures.
Turning to the service providers, for fund manager companies, the largest promoter/initiator of Luxembourg regulated domiciled schemes is J.P. Morgan (US$317.6bn), followed by DWS International (US$196.5bn) and in third position Amundi (US$184.6bn).
For regulated schemes, over 90 new promoters/initiators chose Luxembourg to establish their presence mainly through newly launched funds/umbrellas or in certain cases acquiring existing funds/umbrellas. These contributed to circa US$17.5bn in assets of this business.
Over 130 promoters/initiators launched close to 150 new funds/umbrellas totalling in excess of USD$20.5bn of assets.
New Funds and the rise of the RAIF & LuxLPs
Overall, of regulated funds, new funds/umbrellas and new sub-funds of existing funds/umbrellas launched during the year totalled USD$222.0bn in assets, a 35% increase compared to last year.
In addition to this, we are listing over 500 fund promoters/initiators who have launched RAIFs and LuxLPs from firms located in a diverse list of countries, including places such as Brazil, Cyprus, Estonia, New Zealand, Vietnam, etc.
Among the Luxembourg located ManCo/AIFM rankings of regulated schemes, J.P. Morgan Asset Management (Europe) again keep their first position with total net assets of US$317.0bn followed by DWS Investment (US$201.0bn) in second place and Amundi Luxembourg take the third spot ahead of BlackRock.
Jon Griffin, Managing Director and CEO of JPMorgan Asset Management Europe S.à r.l. (JPMAME) in Luxembourg commented: “With more than three decades of experience in Luxembourg, the scale of our activities today are testament to the depth and breadth of our capabilities so we’re very pleased to have maintained our current ranking”.
There is an unchanged ranking in the Luxembourg located AIFM of regulated alternative funds (Part II/SIF & SICARs): Universal-Investment Luxembourg maintain their first place ahead of Deka International with respective total net assets of US$34.1bn and US$22.6bn. They are followed by Cadelux in third position with US$20.8bn.
This year State Street maintain their lead position for fund administration but sprung a surprise in both custody and, together with IFDS in the transfer agent rankings, where they have risen to the top of the rankings for the first time.
David Suetens, Country Head of State Street Bank Luxembourg commented: “State Street continues to strengthen its leadership position in cross-border services in Luxembourg. Our breadth of service capabilities allows us to merge requirements and leverage our technology and expertise on both regulated and alternative funds. We offer integrated solutions within One State Street, with a seamless, connected set of services to strengthen our clients’ strategy and become their essential partner.”
In more detail, the top positions remain unchanged for the fund administration ranking: State Street lead by total net assets (US$910.9bn) followed by J.P. Morgan Bank in second position (US$666.8bn) and BNY Mellon (US$339.8bn) ranked third ahead of BNP Paribas (US$ 298.7) in fourth.
Among custodians/depositary, for the first time this year, State Street take the top position with the largest proportion of assets under custody with US$926.4bn, followed by J.P. Morgan Bank with US$876.5bn and in third position by Brown Brothers Harriman (BBH) (US$369.9bn).
Another notable change has taken place in the transfer agents ranking, as IFDS / State Street also jump to first position with US$814.3bn of assets followed in second position by RBC Investor Services Bank with US$667.0bn and J.P. Morgan Bank remaining in third place with US$255.7bn.
Among audit firms, PwC maintain their lead in auditing a total of 6,384 sub-funds, ahead of KPMG and Deloitte with respective figures of 3,076 and 2,520 sub-funds.
Steven Libby, Partner and Asset & Wealth Management (AWM) Leader at PwC Luxembourg states: "The PwC AWM team is proud to serve such a large part of the vibrant Luxembourg market, and we continue to look for ways to leverage our leadership position for the benefit of our clients and all key stakeholders in the industry. As PwC predicted in the report, Asset & Wealth Management Revolution: Embracing Exponential Change, the AWM industry has started to go through a period of exponential change, and our team stands ready to help our clients and the industry solve the important problems and capture the tremendous opportunities arising."
For legal advisers, Arendt & Medernach maintain their lead by number of funds (with 4,285 sub-funds) followed by Elvinger Hoss Prussen (with 3,511 sub-funds).
Isabelle Lebbe, Head of Investment Management at Arendt & Medernach commented: “Market leadership is about leveraging our position to help clients select the optimum fund formation strategy for them, providing sector leading insight and support on their fund journey. This is why we are delighted to be recognised as Luxembourg’s leading legal provider, measured by the number of regulated and unregulated funds we advise. We are immensely grateful for the trust placed in our firm by so many clients, and remain dedicated to supporting their goals through an ever changing market that continues to lead the way in EU fund formation.”
As in previous years, Elvinger, Hoss & Prussen is in first position by the total amount of net assets.
Equity fund products are once again the most popular by AUM (US$1,335.5bn) exceeding bond funds which have assets of US$1,315.1bn. Equity funds are also the most popular product in terms of number of sub-funds reaching 4,231 in comparison to bond funds with 3,138 sub-funds.
Karine Pacary, Managing Director, Monterey Insight, commented: “It has been a pleasure to publish the 25th Monterey Annual Fund Report, a notable landmark edition. It has been a challenging year with much political and economic turmoil and of course the ongoing Brexit story. In this context, we noticed this year an increasing number of mergers and acquisitions amongst Luxembourg firms as noted in our Monterey Luxembourg Report.
It is interesting to see the growing popularity of RAIFs and LuxLPs that are now attracting a greater amount of attention, for example the registration of RAIF during 2018 increased in excess of 169% from the previous year. We will continue to monitor these products which will be part of Monterey’s trademark in completing the full picture of the Luxembourg fund industry.”
Please note the figures listed above include UCITS, SICARs and SIFs unless indicated otherwise.
For more information, please contact:
Managing Director, Monterey Insight
Tel. +44 (0)845 625 3863
Notes to Editors
^ For SCS & SCSp, we have included schemes which we believe are classified as an investment fund product, especially focusing on those with an appointed AIFM.
Monterey Insight is an independent fund research company that provides comprehensive statistical analysis of the Luxembourg, Ireland, Guernsey, Jersey and UK fund industries: the only complete reference of service providers for all funds serviced in these jurisdictions.
As at 31st December 2018, leading service providers for Luxembourg funds were as follows (the below ranking includes SIFs, UCITS/UCIs and SICARs):
Source: Monterey Insight, Luxembourg Fund Report.