Karine Pacary, managing director at Monterey Insight, whose 2018 Luxembourg funds industry report showed that money managers continued to set up new investment funds in the grand duchy at a healthy clip last year
Luxembourg-based retail investment funds recorded net outflows in 2018, after seven years of notching up net inflows, while alternative funds gained significant ground.
That’s according to an annual report, “Monterey Insight Luxembourg Fund Report”, published by Monterey Insight, a fund industry research outfit, on 13 June.
The report also showed that JP Morgan, State Street and PWC had a very good year among fund industry service providers.
Net assets under management
“The total net assets for regulated collective investment funds domiciled in Luxembourg decreased for the first time since 2011,” according to Monterey Insight. Net assets were down 6.8% in dollar terms, or 2.1% in euro terms, from €4,183bn in 2017 to €4,094bn in 2019.
“However, when you take a closer look, products such as SICARs and SIFs have both actually increased”, the research firm stated. SICAR assets rose from $55bn to $61bn and SIF assets were up from $582bn to $609bn between 31 December 2017 and 31 December 2018.
The total number of regulated sub-funds rose a “negligible” 2% from 14,612 to 14,903, the firm said.
Unregulated funds also “proved to be popular products”, reckoned Monterey Insights. The number of reserved alternative investment sub-funds hit 590 with total net assets of $48bn, while the number of Luxembourg limited partnerships “enjoyed a great increase” to 878 structures with $92bn in assets.
Karine Pacary, managing director at Monterey Insight, said in a press statement:
“It has been a challenging year with much political and economic turmoil and of course the ongoing Brexit story. In this context, we noticed this year an increasing number of mergers and acquisitions amongst Luxembourg firms as noted in our Monterey Luxembourg Report.
“It is interesting to see the growing popularity of RAIFs and LuxLPs that are now attracting a greater amount of attention, for example the registration of RAIF during 2018 increased in excess of 169% from the previous year.”
In addition, Monterey Insight reported that “over 90 new promoters/initiators chose Luxembourg” last year to launch regulated funds, adding roughly $18bn in assets. In total, 130 outfits started “close to 150 new funds/umbrellas”, totalling $222bn in assets.
Leading service providers for Luxembourg-domiciled funds in 2018
“Among custodians/depositary, for the first time this year, State Street take the top position with the largest proportion of assets under custody”, Monterey Insights stated.
“The top positions remain unchanged for the fund administration ranking: State Street lead by total net assets,” followed by JP Morgan and BNY Mellon.
A “notable change has taken place in the transfer agents ranking, as IFDS/State Street [jumped] to first position” ahead of RBC Investor Services, according to the firm’s data.
“For fund manager companies, the largest promoter/initiator of Luxembourg regulated domiciled schemes is JP Morgan”, by a wide margin.
“Among the Luxembourg located manco/AIFM rankings of regulated schemes, JP Morgan Asset Management (Europe) again keep their first position”, with DWS Investment “in second place and Amundi Luxembourg take the third spot ahead of BlackRock,” Monterey Insight said.
PWC audited twice as many funds as its closest rival KPMG.
Arendt & Medernach was the clear leader among legal advisors to funds, with Elvinger Hoss Prussen in strong second place, the report figures showed.