Investment Strategies
Largest European Fund Domicile Suffers First Fall In Five Years
Luxembourg-domiciled fund assets fell by nearly 30 per cent to $2,152 billion over the year to the end of 2008, down from $3,024 billion in 2007, according to fund researcher Lipper’s analysis of Europe’s largest fund domicile.
The Luxembourg Fund Encyclopedia shows the number of funds rose from 10,971 to 12,102 - an increase of just over 10 per cent. This highlights that there is still sustained interest in Luxembourg as a jurisdiction, even during such turbulence in financial markets.
JP Morgan Bank maintained its position as the largest fund administrator by total net assets ($300.7 billion), with RBC Dexia and Fastnet in second and third places.
For professional firms, PricewaterhouseCoopers sustains its dominance in auditing 5,337 funds. Among the legal advisors, Arendt & Medernach was just ahead of Elvinger Hoss & Prussen by number of funds, however, Elvinger Hoss & Prussen has maintained its leading market share by total net assets.
Specialised Investment Funds contributed $179.6 billion in 1,712 funds. This total is slightly down on last year’s total ($205.4 billion), but still considerably up on that for funds under the previous law ($104.7 billion in 2006).
The diversified range of asset classes in Luxembourg has ensured that there have been some resilient areas. For example, money market funds rose by 16 per cent (to $561.9 billion) and ETFs rose by 59 per cent (to $32 billion).
“Half of the decline in fund assets took place in September and October, highlighting that the financial crisis was the key factor affecting the industry. Around 80 per cent of the overall asset fall was due to market performance, rather than investor withdrawals, which provides some hope that as the markets recover, so too will the Grand Duchy’s fund assets,” said Ed Moisson, director of Fiduciary Operations at Lipper.
Luxembourg is on the OECD’s "grey list" of countries that have agreed to improve transparency standards, but have not yet signed the necessary international accords, according to a statement issued by the body last week.