The Association of the Luxembourg Fund Industry (ALFI) has released figures for 2013 confirming that the Grand Duchy’s funds industry had a positive year, although serious challenges lie ahead.
Net assets managed by investment funds under Luxembourg law reached EUR2,615.4bn at the end of December 2013, compared to EUR2,383bn at the end of 2012.
With EUR193bn in 2013, net sales of Luxembourg investment funds accounted for nearly half of all sales for the European fund industry.
The number of funds and sub funds increased over the last 12 months to reach 3,902 (3,841 at the end of 2012) and 13,685 units (end of 2012: 13,420).
Nearly 100 new promoters have launched products in Luxembourg.
Marc Saluzzi (pictured), chairman of ALFI, says: “2013 was positive, but there are challenges ahead for the sector. For example, whilst the Alternative Investment Fund Managers Directive (AIFMD) has finally been implemented, and despite positive developments in the negotiations on FATCA, the regulatory agenda remains a heavy burden. The proposed Financial Transaction Tax (FTT), the draft regulation on money market funds and the final agreement on MiFID II could have a severe negative impact on the European asset management industry.”
On FATCA, ALFI confirmed that the Model 1 Intergovernmental Agreement between Luxembourg and the US is to be signed soon.
On AIFMD, ALFI reports that six months after the implementation of the Directive, the effect of the new regulation is beginning to take shape. In Luxembourg some 90 alternative investment fund managers have applied to the CSSF for approval under the new regulations. At this point, 12 companies are listed on the official CSSF list of AIFM, whilst six others have received approval and are finalising the paperwork.
“Total assets under management in alternative funds in Luxembourg is currently around EUR500bn and ALFI’s objective is to double these assets within five years,” says Saluzzi. “Our comprehensive range of investment vehicles will help achieve this.”
The new limited partnership regime introduced with the law transposing the AIFM Directive into Luxembourg law has met with the success, with 83 units established so far under the plan.
Similarly, specialised investment funds (SIFs) continue their momentum of growth. More than 1,500 SIFs have been created since its introduction in 2007, and they now manage more than EUR300bn of assets. This is the most popular investment product in its class in Europe.
Saluzzi says: “Whilst initial results on AIFMD are very encouraging, we need to wait until at least the end of July 2014 to see Luxembourg’s role in this sector.”