Small declines in global financial markets and modest outflows pushed down the total amount of assets under management in Luxembourg investment funds (UCIs) in September 2023, said the Luxembourg Financial Sector Supervisory Commission (CSSF). Archive photo: Nader Ghavami / Maison Moderne

Small declines in global financial markets and modest outflows pushed down the total amount of assets under management in Luxembourg investment funds (UCIs) in September 2023, said the Luxembourg Financial Sector Supervisory Commission (CSSF). Archive photo: Nader Ghavami / Maison Moderne

Luxembourg’s investment fund industry saw a 1.5% decrease in net assets in September 2023, bringing the total assets under management down to €5.1trn , according to the grand duchy’s financial regulator.

Total assets under management at Luxembourg-based investment funds slipped by a modest €77.8bn in September 2023.

The figures comes from the Luxembourg Financial Sector Supervisory Commission (CSSF) on Friday 27 October 2023 and cover mutual funds (undertakings for collective investment orUCIs), specialised investment funds (Sifs) and investment companies in risk capital (Sicars) during September 2023.

The sector’s total net assets decreased to €5.1trn, a 1.5% drop from the €5.2bn recorded at the end of August 2023. Despite this monthly downturn, the sector notched up a 1.59% increase in net assets over the preceding twelve months.

The financial regulator attributed the September monthly decline to €26.8bn in net outflows, equivalent to a 0.52% reduction, and a €51bn drop in asset values in the financial markets, accounting for a 0.98% decrease.

The total number of funds experienced a slight decrease, moving from 3,323 in the previous month to 3,319 in September. The sector included 2,171 umbrella entities, representing 12,953 sub-funds, and when added to the 1,148 traditional undertakings for collective investment entities, a total of 14,101 active fund units were domiciled in Luxembourg as of end of September 2023.

Market dynamics and investment trends

The CSSF’s report further explored the impacts on various UCI categories, shedding light on a predominantly negative trend within equity markets during September. These markets faced significant downturns, influenced by rising long-term yields despite strong performances earlier in the year. US equities, in particular, were heavily impacted, though the appreciation of the US dollar against the euro helped mitigate some losses. Other major equity markets exhibited a similar downward trend, albeit with lesser losses, with the exception of the Japanese equity UCI category, which remained stable. Throughout the month, all equity UCI categories registered negative capital investments.

Monetary tightening affect

According to CSSF, monetary policy developments also played a significant role in September’s financial landscape, with several central bank meetings taking place. The European Central Bank responded to strong inflation forecasts by , bringing the rate for main refinancing operations to a record 4.5%. Shortly after, both the Federal Reserve and Bank of England decided to maintain their interest rates, reaffirming their dedication to combating inflation and suggesting that restrictive monetary conditions would persist.

These central bank actions contributed to a surge in long-term yields, reaching levels not seen in several years and resulting in losses across most bond UCI categories, clarified the CSSF.

Related articles