- Andy Bissell
Healthy Growth for the Luxembourg Fund Industry
New findings from the 26th 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 as at 31-Dec-2019.
The total net assets for regulated collective investment funds domiciled in Luxembourg increased to US$5,351.9bn from US$4,680.0bn in 2019. This represents an increase of 14.4% in US Dollar or equates to a Euro increase of 16.7% from €4,094.0bn in 2018 to €4,777.3bn in 2019.
Taking a closer look, all products, except the Other OPC under Part II, increased in assets during the year; the largest winners were RAIFs (+155%), SICAV Feb07 (+17%) and SICAV Part I Dec10 (+17%). The overall number of regulated sub-funds reached 14,991, a negligible increase of 0.6% from the 14,903 of the previous year.
In addition to the regulated structures, Reserved Alternative Investment Fund (RAIF) and Luxembourg Limited Partnerships (LuxLPs) continue to enjoy a great increase and proved to be popular products for investment. RAIFs double their total net assets to reach US$122.2bn with 1,048 sub-funds while LuxLPs reached US$167.8bn with 1,303 sub-funds. With this increase of popularity, RAIFs are now of greater importance than SICARs in term of assets and number of sub-funds.
More than 1,350 fund and sub-funds were launched during the year, reaching US$175bn. 74% of these new sub-funds were invested in traditional investments such as bonds, equities and mixed products. Alternative funds come in second position with 18% including alternative investments, private debt, and private equity/venture capital.
Of the newly launched funds, and as expected, ESG make a considerable progression covering 13% of assets and 10% in number of sub-funds.
As in the previous year, equity fund products are once again the most popular by AUM (US$1,647.9bn) exceeding bond funds which have assets of US$1,480.6bn. This represents an increase of 23% and 13% respectively. Equity funds are also the most popular product in terms of the number of sub-funds reaching 4,677 in comparison to bond funds with 3,294 sub-funds.
Turning to the service providers, for fund manager companies, the largest promoter/initiator of Luxembourg regulated domiciled schemes is J.P. Morgan (US$356.0bn). Amundi rose to second position (US$220.8bn) followed closely in third position by DWS International (US$213.2bn).
Among the Luxembourg located ManCo/AIFM rankings of regulated schemes, J.P. Morgan Asset Management (Europe), as has been the case for a number of years, retain their top position with total net assets of US$355.3bn followed by DWS Investment (US$219.9bn) in second place and Amundi Luxembourg take the third spot with US$199.9bn. This year UBS Fund Management (Luxembourg) overtake BlackRock to take fourth position.
Christoph Bergweiler, Managing Director and CEO of JPMorgan Asset Management Europe S.à r.l. (JPMAME) in Luxembourg: “We’re pleased to maintain this leading position. Luxembourg is a critical hub for excellence in cross-border investment solutions and in the industry-leading provision of Alternative Investment Fund management. With JPMAME’s licenses for providing investment services, and building on more than thirty years of experience with our oversight of more than $400 billion USD in client assets in Luxembourg, JPMAME will continue to play an expanding role in supporting our institutional and retail clients across Europe and globally.”
This year again State Street maintain their lead position for all the three rankings of fund administration, custody and, together with IFDS, transfer agent.
Eduardo Gramuglia Pallavicino, Country Head of State Street in Luxembourg: “With 2020 marking State Street’s 30th anniversary in Luxembourg, we’re proud to continue to be a market leader for fund administration, custody and transfer agency services. Our increased market share reflects our strong commitment to asset servicing and supporting our clients’ cross-border funds. Our innovation over the years has also helped inform our deep understanding of clients’ needs and allows us to fully support them in generating and sustaining growth.”
In more detail, the top positions remain unchanged for the fund administration ranking: State Street in front by total net assets (US$1,074.1bn) followed by J.P. Morgan Bank in second position (US$765.3bn) and BNY Mellon (US$366.6bn) ranked third ahead of BNP Paribas (US$332.6) in fourth.
Among custodians/depositary, as was the case for administrators, State Street take the top position with the largest proportion of assets under custody with US$1,081.5bn, followed by J.P. Morgan Bank with US$991.1bn and in third position by Brown Brothers Harriman (BBH) (US$423.9bn).
Regarding the transfer agents ranking, as last year IFDS / State Street top the rankings with US$952.1bn of assets followed in second position by RBC Investor Services Bank with US$713.9bn. CACEIS had a productive year and enter the top placings for the first time taking third position with US$353.6bn just ahead of J.P. Morgan Bank with US$353.2bn.
Among audit firms, as it has been the case for a few years, PwC maintain their lead in auditing with a total of 5,982 sub-funds, ahead of KPMG with 3,021 sub-funds. The surprise came from EY taking the third position this year ahead of Deloitte with respective figures of 2,826 and 2,578 sub-funds.
Oliver Weber, Partner and Asset and Wealth Management Leader at PwC Luxembourg, says: "We have seen a strong resilience of the Luxembourg mutual fund industry during the COVID-19 crisis. Since the beginning of the year, as at end July 2020, assets of Luxembourg domiciled mutual funds have lost only 2.2% (i.e. EUR 102bn) in comparison to Euro Stoxx 50, Dax30 and CAC40 which lost 15.3 %, 7.1% and 20% respectively during the same time period. This ability to withstand was also demonstrated by the fact that over this time period, mutual funds in Luxembourg saw over EUR70bn of net inflows. Going forward, we believe the Luxembourg fund industry will remain resilient, however, asset managers should prepare for volatile markets and adapt their business models accordingly as fee and margin pressure could increase with a decline in AuM driven by capital markets in the coming months. We had forecast those trends already last year - i.e. before COVID-19 - in some of our thought leadership. They will probably be accelerated and complemented by new challenges in light of the pandemic crisis. As the largest professional services firm serving the Asset and Wealth Management industry globally and in Luxembourg, our PwC team stands at the ready to help our clients in critical issues and assist them to stay competitive in this challenging environment."
For legal advisers, Arendt & Medernach maintain their lead by number of funds (with 4,380 sub-funds) followed by Elvinger Hoss Prussen (with 3,557 sub-funds).
Gilles Dusemon, Partner, Investment Management at Arendt & Medernach commented:
“Working closely with our clients, helping them to navigate change and adversity and seizing every opportunity has been at the core of our legal services offering for over 30 years. We are so proud of our teams’ outstanding achievement and feel incredibly privileged to have been chosen again this year as the law firm of choice for more companies establishing and developing funds in Luxembourg than any other firm.”
As in previous years, Elvinger Hoss Prussen is in first position by the total amount of net assets with US$1,804.4bn.
Karine Pacary, Managing Director, Monterey Insight, commented: “As always, it has been a pleasure to publish the 26th Monterey Annual Fund Report. It has been another challenging year with the turmoil of Covid19, its implication on businesses and of course the soon closing debate on Brexit. As expected, the report demonstrated a shift in UK ManCo/AIFM to Luxembourg or other EU members.
Enhancing the Monterey Luxembourg Fund Report with the gathering of data on RAIFs and Luxembourg Limited Partnerships, we noticed with interest the increase in popularity of the RAIF products. Similar upward trends for the unregulated Luxembourg Limited Partnerships are shown helping to demonstrate the popular use of SOPARFI vehicles with data that are often not widely available in Luxembourg.
We are proud to be able to monitor these unregulated products which are now 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. However, RAIFs and unregulated Luxembourg Limited Partnerships are excluded from the table rankings below.
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 2019, leading service providers for Luxembourg funds were as follows (the below ranking includes SIFs, UCITS/UCIs and SICARs):
Source: Monterey Insight, Luxembourg 2020 Fund Report