Independent fund research company Monterey Insight has published the 29th edition of its Luxembourg Fund Report, which covers the market shares of service providers in the grand duchy’s fund industry, with figures up until 31 December 2022.
“The market turmoil and instability in 2022 have also affected Luxembourg, where the assets under management have declined. This trend was also seen in other jurisdictions that Monterey Insight covers (Ireland, Jersey and Guernsey),” said Karine Pacary, Monterey Insight’s managing director.
“Unregulated funds have attracted more interest and increased their asset value by 52%, while regulated funds have declined by 14% (this includes organic growth, new business and the shift from regulated to unregulated funds like Raifs, which has been common in recent years). The best performers are private debt, private equity/venture capital and property/real estate.”
Here are the rankings--and a few key takeaways from the report.
State Street leads in fund admin, custody, as transfer agent
State Street has maintained its lead position in this year’s ranking in the categories of fund administration, custody and, together with IFDS, transfer agent. In terms of fund administration, State Street was in first place by total net assets (€1,011.3bn as of 31 December 2022), followed by J.P. Morgan Bank, BNY Mellon and Caceis.
With €1,014.6bn in net assets, State Street also led in terms of custodians/depositaries, said Monterey Insight’s data. J.P. Morgan Bank was again in second place, followed by BNP Paribas and Caceis.
Monterey Insight’s fund report also shows that IFDS/State Street were the top transfer agents, with €981.9bn in net assets. IFDS is a joint venture between State Street Corporation and SS&C Technologies.
IFDS/State Street were far ahead of the transfer agent in second place (J.P. Morgan Bank, with €521.5bn in net assets), and had more than double the net assets of those ranked third and fourth (RBC Investor Services Bank and Caceis).
“We are proud to retain our market leadership position in Luxembourg’s fund administration, custody and transfer agency sectors,” said , country head of State Street in Luxembourg, in a press release. “Our leading position in the market reflects our unwavering commitment to the grand duchy’s asset services industry and our dedication to delivering world-class solutions to our clients across all asset classes.”
J.P. Morgan stays at top in asset management
J.P. Morgan was the largest promoter/initiator of Luxembourg regulated schemes (€367.9bn as of 31 December 2022), followed by Amundi (€281.0bn), said Monterey Insight. These top two positions have remained unchanged, added the fund research company. DWS International came in third place (€190.0bn), followed by Blackrock Financial Management (€174.0bn).
J.P. Morgan Asset Management (Europe) kept its top position amongst Luxembourg-located management company (manco)/alternative investment fund managers (AIFM), with €366.0bn in net assets. It was far ahead of the mancos/AIFMs ranked in second, third and fourth positions: Amundi, DWS Investment and UBS Fund Management (Luxembourg).
“The dedication of Luxembourg’s ecosystem, which has developed into a critical hub for excellence in cross-border Ucits investment solutions as well as the industry-leading provision of alternative investment funds, remains notable,” stated Philippe Ringard, managing director and CEO of JPMorgan Asset Management Europe. “This year, which marks 35 years since J.P. Morgan Asset Management was established in Luxembourg, speaks to our strong heritage within the ecosystem.”
PwC dominates audit category
PwC maintained its multi-year lead in auditing in Luxembourg, with a total of 6,264 sub-funds (or €2,523.7bn in net assets as of 31 December 2022). EY advanced into second place this year (2,771 sub-funds), noted Monterey Insight, putting KPMG into third place with 2,313 sub-funds. Deloitte was in fourth place, with 2,249 funds.
“We are growing in a challenging environment, but the Luxembourg financial centre has further strengthened its position as a hub for asset management,” said , partner and asset and wealth management leader at PwC Luxembourg. “Luxembourg’s business and regulatory environment has demonstrated its ability to deal with rapidly changing stakeholder demands and has helped existing players expand their presence and new players enter the market.”
Arendt tops legal ranking
In the legal advisers category, Arendt & Medernach have maintained their top position in terms of sub-funds (4,488 as of 31 December 2022), about 1,000 sub-funds ahead of second-place Elvinger Hoss Prussen. Allen & Overy and Linklaters take the third and fourth positions, with 729 and 710 sub-funds respectively.
For the first time, Arendt has also taken the lead in terms of net assets (€1,593.4bn), noted Monterey Insight, slipping past Elvinger Hoss Prussen (€1,587.4bn). Linklaters and Allen & Overy swap places when ranked according to net assets: Linkaters with €364.7bn and Allen & Overy with €246.4bn.
“The Luxembourg fund market continues to be an attractive proposition for investment managers and we have seen a growth in the number of clients seeking Arendt for advice and guidance as they adapt their strategies to changing market conditions,” said , partner, investment management at Arendt & Medernach.
Fund figures in detail
Total net assets for regulated collective investment funds domiciled in Luxembourg dropped from €5,879.0bn in 2021 to €5,055.1bn in 2022, a decrease of 14.0%, said Monterey Insight’s fund report. The value of assets for Ucits (undertakings for collective investment in transferable securities) declined by 16.7%, while the value of assets for Sicars (société d'investissement en capital à risque) increased by 20.0%.
Raifs (reserved alternative investment fund), LuxLPs (limited partnership) and Soparfis (société de participations financiéres) all saw increases during 2022.
Raifs saw the largest increase, “totalling €429.5bn of assets representing a 47.6% increase compared to €290.9bn in 2021,” said Monterey Insight. Reserved alternative investment funds totalled 2,666 funds and sub-funds, an increase of 30.4% during 2022, added the research company.
LuxLP and Soparfi funds and sub-funds reached 2,770, or a 30.0% increase when compared to 2021. In 2022, “LuxLPs and Soparfis reached €638.5bn (€413.3bn in 2021), a 54.5% increase of assets,” said Monterey Insight in its press release.
When looking at assets under management, equity fund products remained the most popular (€1,693.8bn AUM).
SFDR snapshot
Monterey Insight reported that 773 regulated and unregulated Luxembourg funds were listed as article 9 as of 31 December 2022, meaning they have a sustainable investment objective. These accounted for €256.1bn. There were 4,906 funds and sub-funds classified as article 8--which promote environmental and/or social characteristics--accounting for €2,516.9bn.
29.8% of newly launched funds in 2022 were article 8 funds (up 28% from 2021), while 8.7% of new funds were categorised as article 9 (an increase of 5.8%), said Monterey Insight.
Find Monterey Insight’s full report .
This article was published for the Delano Finance newsletter, the weekly source for financial news in Luxembourg. .