PWC said that Luxembourg fund management companies looked after 17% more money last year, but they are currently facing profitability pressure.
Library picture: Kirchberg, February 2020.
Photo credit: Matic Zorman/Maison Moderne
Employment at fund management companies (mancos) in the grand duchy has more than doubled over the past decade, with assets under management rising by more than a half since 2014.
That’s according to a report out this week from the consulting firm PWC Luxembourg.
Mancos handle certain (but not all) key functions of investment fund operations for money managers, either on behalf of a corporate group or as a third party service provider.
The number of mancos (of all types) in the grand duchy grew from 180 in December 2010 to 257 in December 2019, PWC Luxembourg said.
Assets under management was, collectively, up from €2.3trn in 2014 to just under €4trn last year, including a 17% gain between 2018 and 2019.
Manco employment increased from 2,339 people in December 2010 to 5,948 employees in December 2019. The number of manco jobs grew by 4% in 2019, a slower pace than the +15% jump in 2018 and +10% staff adds in 2019.
The largest Luxembourg manco, as of 31 December 2019, was JPMorgan Asset Management (part of a US group), which managed €320bn, up 15% over the previous year.
The largest third party manco was Fundrock Management Company (headquartered in Luxembourg), which collectively managed €68bn in assets, a gain of 57% compared to the previous year. (Fundrock said in a press release the increase was “attributable to organic growth and the acquisition of SEB Fund Services at the end of 2018. The firm had been placed second in last year’s index.”)
The top Luxembourg authorised alternative investment fund manager was Universal-Investment-Luxembourg (part of a German outfit), with €58bn in assets under management, a rise of 11% compared to December 2018.
Looking ahead, the PWC paper stated:
“One of the biggest challenges for mancos will be managing their profitability. Indeed, over the past years, we have noticed an erosion of profitability due to a combination of factors such as the pressure on fees or the need for additional substance in mancos. Those elements, combined with a decrease of their [assets under management] following the crisis ([assets under management] in Luxembourg decreased by 12% from December 2019 to March 2020, representing €569bn) will be on the top of the mancos diaries.”