Tiny challenger builds on muscle
Luxembourg, a tiny West European nation with a population of about 521,000, is one of the largest investment fund centers in Europe and the world’s leading hub for fund distribution. It is also the second biggest fund center globally, after the US.
Assets under management (AUM) of the Luxembourg fund industry rose to a historical high last December of nearly $3.76 trillion, with 52 percent of the surge driven by net sales, according to Luxembourg for Finance (LFF), a public-private partnership founded in 2008 between the Luxembourg government and the Luxembourg Financial Industry Federation to promote the financial industry of the European Union member nation.
Luxembourg retained its position as the leading European fund domicile, attracting more than 42 percent of net sales of European regulated funds as at the end of November 2014, LFF data show.
The Luxembourg fund industry is targeting new markets for future business expansion, namely Brazil, Mexico, Australia and the Chinese mainland. On the mainland, progressive renminbi internationalization, the position gained by Luxembourg as an offshore renminbi center and the success of the Shanghai-Hong Kong Stock Connect program are fueling hopes of a gradual opening up of the mainland fund market to industry players in the European country.
Since 2008, Luxembourg-based UCITS (Undertakings for Collective Investment in Transferable Securities) funds can be distributed on the Chinese mainland via the QDII (Qualified Domestic Institutional Investor) mechanism.
Luxembourg for Finance, a public-private partnership founded in 2008 to promote the financial industry, says fund industry AUM (assets under management) in December 2014 hit a high of $3.76 trillion.