Q&A with Marcus Peter and Irina Stoliarova discussing the key trends currently driving growth and development within Luxembourg’s funds industry.
In 2019 Luxembourg fund industry revealed significant growth that was not slowed down in the first three quarters of 2020. As at 31 August 2020, the total assets under management (AUM) amounted to EUR4,696.762 billion compared to EUR4,617.395 billion as at 31 July 2020, showing an increase of 1.72 per cent over one month and over the last twelve months, the volume of net assets rose by 4.31 per cent.
Regardless of the fact that asset managers, investment advisers and other market participants faced some difficulties due to Covid-19 pandemic, we observed, however, that 2020 is quite a successful year. This is because 2020 showed not only continuing growth in terms of AUM but also pertaining to the set-up of new investment vehicles. Also, the Covid-19 pandemic situation did not force many investment funds to suspend redemption request hereby showing robust and secured liquidity management within the investment funds. Since the Brexit referendum Luxembourg attracted increasing interest from UK based asset managers or asset managers planning to centralise their future cross-border activities via Luxembourg in the post Brexit era. Due to its competitive and professional environment, more than 60 financial institutions selected the Grand Duchy of Luxembourg as their post-Brexit gateway to the EU single market in the last two years.
One of the new key trends driving growth and development in Luxembourg fund industry is sustainable finance. Due to Luxembourg Green Stock Exchange that doubled its green, social, suitability and ESG (Environmental, Social and Governance) securities over the last year and the Luxembourg Finance Labelling Agency (LuxFLAG) that grew considerably over the last year, continuing to label sustainable products across seven jurisdictions, Luxembourg continues to be the place of interest for various fund initiators as well as investors across the globe. Along with those market players, the Luxembourg government plays an important role in developing sustainable finance area. Implementation of new disclosure regulations added substantial burden on a short term perspective, however, in our opinion, will create a strong impact for bringing the Luxembourg investment fund market to the next level as green financial centre in the mid-term and long-term future.
Fintech is another key trend that drives the growth of Luxembourg economy and will continue to develop over the years bringing new business opportunities to the country.
Published by Global Fund Media, the article is part of the report “Luxembourg Fund Services in Focus 2020“ which examines the opportunities for growth in the funds industry, with Luxembourg at the epicentre. It discusses the capacity for expansion in the realm of private equity, real estate and venture capital and the impact of digitalisation.
The article is available for download as a PDF file; the whole edition is free to access online.