Luxembourg has reinforced its position as Europe’s leading manco market, boasting €5.215trn in assets under management in 2023. This figure constitutes 30% of the continent’s total AUM, outpacing Ireland’s 23%, Germany’s 15% and France’s 13%. Notably, the top three mancos in Luxembourg oversaw more than €1trn in AUM as of December 2023, marking an 18% increase from the previous year, noted PWC Luxembourg in its 2024 barometer, on Thursday 23 May 2024.

The ninth edition of the barometer draws from a sample of 91 participants, representing 86% of regulated AUM and 50% of the mancos’ workforce in Luxembourg. The report indicates a 12% surge in alternative AUM managed by Luxembourg mancos, primarily propelled by non-regulated investments. This sector welcomed eight new authorised alternative investment fund managers in 2023. Moreover, employment in the sector rose by 11% from the previous year, totalling over 7,700 employees.

PWC’s analysis underscores the growing significance of third-party mancos, with their share of AUM climbing from 6% in 2018 to 18% in 2023. This segment has witnessed robust activity in mergers and acquisitions, catering to diverse asset managers. Additionally, non-regulated assets saw a significant uptick, surpassing €1trn, solidifying Luxembourg as the preferred domicile for regulated and unregulated products and their AIFMs.

PWC identifies various challenges and drivers within the manco sector. Streamlining internal processes, digitalisation and automation remain priorities amid rising cost and margin pressures. In the report, PWC urged third-party mancos, in particular, to diversify revenue streams and implement rigorous client acceptance procedures.

The barometer also underscores the mounting integration of environmental, social and governance criteria into investment decisions, reflecting a broader industry trend towards sustainability.

In a press statement, Bertrand Jaboulay, management company leader at PWC Luxembourg, highlighted the manco market’s significant rebound in 2023, with a 5.5% increase in AUM compared to the previous year. This growth is largely attributed to new real assets AUM, reaffirming Luxembourg’s status as the domicile of choice for AIFMs and real asset products.

Audit director Pierre-Marie Bochereau underscored the regulatory landscape’s role in market consolidation, driving a shift towards specialised third-party mancos. This model provides critical regulatory expertise and operational efficiencies. Laurent Butticè, audit partner, mentioned Luxembourg’s resilience in a year marked by macroeconomic volatility. He noted that Luxembourg’s stability and expertise continue to be attractive for the manco sector, with 30% of the European Union’s total net assets of regulated funds domiciled in the country.

Looking ahead, the barometer anticipates continued market consolidation as mancos strategise to expand market shares and reduce competition. This strategic response is expected to shape the future dynamics of Luxembourg’s manco market.