Investment funds domiciled in Luxembourg and initiated by UK asset managers reported net assets under management of €581.5bn (£440.3bn, $634.3bn) at the end of 2015; the second largest proportion after the US with €759.8bn.
A UK departure (or Brexit) opens the door to great uncertainty about how cross border investments could continue with the EU.
“The Devil is in the details,” said Camille Thommes, director general of Associations of the Luxembourg Fund Industry (ALFI), which would prefer that the UK remain in the EU.
“All firms, wherever they are based, need to look at the potential scenarios,” he said.
Details, however, are scant; as the date of the referendum remains either a closely guarded secret or is still yet-to-be-determined.
AIFM hub
Thommes was speaking at an event in London on Wednesday where ALFI provided an industry update.
At the end of 2015 Luxembourg had 211 authorised alternative investment fund managers (AIFMs), 626 registered AIFMs, and 950 limited partnership.
Net assets under managment held by the Luxembourg investment funds had reached €3.5trn by the end of December 2015.
“The high net sales that we continue to see demonstrate that the Luxembourg investment fund product remains a preferred choice for the international investor,” said ALFI chairman Denise Voss.
“Fund promoters from 69 countries around the world continue to use Luxembourg as their platform for marketing their funds internationally.”
China growth
2015 also saw further developments in the gradually opening of the Chinese market, with Luxembourg remaining Europe’s leading financial centre for RMB dominated investment funds.
Luxembourg Ucits received permission to participate in the Hong Kong-Shanghai Stock Connect scheme in 2014.
By 2015, 81 Luxembourg domiciled investment funds were authorised by Luxembourg’s financial regulator the Commission de Surveillance du Secteur Financier (CSSF) to take advantage of the facility to invest in China A-shares listed on the Shanghai stock exchange.
In April 2015, the People’s Bank of Chine announced that it was granting a CNY50bn (£5.3bn, $7.6bn, €7bn) Renminbi qualified foreign institutional investor (RQFII) quota to Luxembourg.
ICBC Europe and Bank of China (Luxembourg) are the first financial institutions to have benefitted from the programme to the tine of CNY4bn and CNY2bn, respectively.
Adaptive
Despite increased financial centre competition, uncertain economic environments, and the high volatility of capital markets; Voss is confident that Luxembourg can adapt.
“The overall environment in which the asset management industry evolves has rarely been as diverse as today. If some recent development and trends clearly have the potential to stimulate the sector, others are more likely to have a negative impact.
“However, our industry players’ proven capacity to adapt to a rapidly changing environment and the fact that Luxembourg funds are distributed on such a large scale around the world, lead me to believe that our industry can continue to profess in the coming years.”
