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Luxembourg Fund Industry Performs Well In 2013

by Ulrika Lomas, Lowtax.net, Brussels
06 February, 2014

Luxembourg's fund industry had a positive year in 2013, but challenges still remain, according to a report from the Association of the Luxembourg Fund Industry (ALFI).

Net assets managed by investment funds under Luxembourg law reached EUR2.6 trillion (USD3.5 trillion) at the end of December 2013, compared to EUR2.4 trillion at the end of 2012, ALFI said.

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 twelve months to reach 3,902 (3,841 at the end of 2012) and 13,685 units (13,420 at the end of 2012).

Commenting on the past year, Marc Saluzzi, Chairman of ALFI, said: "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."

ALFI confirmed that Luxembourg and the United States will soon sign a Model 1 Intergovernmental Agreement on the Foreign Account Tax Compliance Act (FATCA).

The association also noted that six months after implementation of the AIFMD, 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 finalizing the paperwork.

"Total Assets under management in alternative funds in Luxembourg is currently around €500 billion and ALFI's objective is to double these assets within 5 years," says Saluzzi.

In this context, two developments are of particular interest:

  • The new Limited Partnership regime introduced with the law transposing the AIFM Directive into Luxembourg law has met with 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 €300 billion of assets. This is the most popular investment product in its class in Europe.

Mr Saluzzi concludes: "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."

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