This year, the number of ManCo has shown a net decrease of 4, from 305 to 301. This trend is perceivable over the last 2 years and is explained by the decrease of 35 UCITS licences over the last 4 years, partially compensated by AIFM licences.
The reasons of the decrease are mainly due to:
● market consolidation
● cost and regulatory burdens
● the avoidance to face or report to the regulator
Nevertheless, the ManCo market remains dynamic, with 11 new players among which 10 are AIFMs. This figure confirms the trend observed with the huge increase and transformation of the Luxembourg domicile from a single UCITS domicile to a UCITS and real assets domicile.
Despite the current uncertain economic environment, ManCos continue to heavily recruit with an increase of the staff of 5% compared to last year and 40% in 5 years. This figure illustrates the importance of substance and governance in Luxembourg ManCos.
After peaking in 2021, in a context of war between UK and Russia generating inflation, increase of cost of raw material and energy and increase of interest rates, total Luxembourg AUM managed by ManCos suffered a strong correction in 2022 driven by liquid assets and the decline of stock and bond markets. Nevertheless, the decrease of regulated AuM is explained by 11% coming from market evolution and only 3% from net sale demonstrating the strong resilience of the fund and ManCo industries in Luxembourg. On the over hand AIF market shows a very strong increase of 25% of the AuM boomed by the increase of 45% of Non regulated AIF confirming the new leadership of Luxembourg domicile in the Real assets industry.
In terms of sustainable assets managed by Mancos, 92% of these assets are from UCITS and the remaining 8% are coming from AIF. 90% of the sustainable assets are article 8 and only 10% are article 9.
54% of the AuM managed by Mancos are either Article 8 or Article 9 as at 31 December 2022, whereas looking backward, last year’s ManCos were targeting 45% for the end of this period revealing the strong development and the acceleration of transformation towards SFRD compliant products.
In 2022, the number of ManCos having a MiFID licence has jumped from 80 to 87. These Mancos are managing 221 billions of AuM showing an increase of 19% compared to 31 December 2021.
A spotlight on Governance
A spotlight on Governance PwC Luxembourg
Top trends for ManCos
Technology also remains a hot topic, with 37% of ManCos having allocated a budget to their digital transformation that corresponds to 5 to 10% of their revenue. The top 4 of the priority of Mancos for their transformation journey concerns ESG data/ESG requirements, the oversight of delegated functions, the data reporting and the compliance requirements.
ManCos consider Luxembourg as an attractive Fund hub and the Luxembourg ecosystem is seen as the main reason to set-up or to keep a ManCo in Luxembourg. Also, ESG/sustainable finance, the evolution of the EU legislation (including AML, EMIR, ATAD3…), Alternative investments, digital & technology and pressure on fees will be the key trends for the upcoming months for ManCos.
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