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Caroline DUPUY
EY Luxembourg
Tel.: + 352 42124 7552
EY Luxembourg publishes its 2015 edition of Investment Funds in Luxembourg
Luxembourg, 14 September 2015 – EY Luxembourg has just released its 2015 edition of Investment Funds in Luxembourg – A technical guide, designed to answer many questions on setting up and operating investment funds in Luxembourg. The 2015 publication has been updated to cover recent legislative and regulatory changes.
Good times but not losing sight of the macroeconomic impact
The headline numbers would indicate that the investment fund industry is in very good health with strong asset flows over the last 12 months and margins remaining broadly stable. These strong asset flows are driven by zero to negative interest rates and a growing realization by investors that they must take direct personal responsibility for their future retirement and saving requirements.
However, according to Michael Ferguson, EMEIA Regulated Funds Practice and Luxembourg Wealth & Asset Management Leader at EY Luxembourg, “the fund industry will have to deal with a number of significant headwinds in the near future. These include the much discussed expected increase in US interest rates, a cooling Chinese economy and volatile markets, a weak EU economy still dealing with Euro matters in addition to the potential fall-out from a range of potential political risks.”
The passive sector experienced some of the strongest overall inflows, (despite some recent outflows) with assets in ETF types of products now estimated at around Euro 2.7 trillion. The growth of the passive sector has had many spill-over effects on the traditional passive sector with greater focus on fees and performance but also pushing the traditional active managers into greater product innovation.
Overall European assets under management amounted to approximately Eur 12.7 trillion as of May 2015, an increase of 12% since December 2014. UCITS assets in Europe still dominate with a 73% share of the total AUM, the balance being made up of a range of non-UCITS products including those that come within the remit of the Alternative Investment Fund Directive. Over the coming years, we can expect further significant product shift with out-sized growth in the alternative, passive and solution segments resulting in the core traditional active sector coming under further pressure.
The impact of regulation and technology
The implementation of the regulatory agenda continues unabated, with much focus and discussion on depositary reform, remuneration policies and practices, the future of money market funds, extension of the AIFMD Passport to non-EU domiciled products and managers, and the likely impact of MiFID II all being in the headlines. The unrelenting focus and investment on implementing the regulatory agenda, strengthening risk management and compliance will continue to put margins under some pressure.
The impact of technology, the digital world, utilization of big data are all much discussed topics with the overriding view that mobile technology will have a critical role to play in the distribution of investment funds to the next generation of investors.
Challenges ahead
Looking to the future, what should the fund industry be focusing on? Many of the key areas of focus are highlighted in ALFI`s (Luxembourg Investment Fund Association) recently published 2020 Ambition Paper. The overall key ambition must be that the industry is “serving the interests of investors and the economy”. To achieve this overall ambition, ALFI has set itself five equally important key objectives:
• Promote practices that align the interests of investors and industry
• Articulate the essential role of investment funds for the global economy
• Connect investors with worldwide market opportunities
• Ensure Luxembourg remains the fund center of choice for asset managers
• Stimulate innovation, research, education and talent development
About the 2015 edition of Investment Funds in Luxembourg
Investment Funds in Luxembourg is a technical guide providing, in a clear and concise format, an introduction to Luxembourg as a center for investment funds, the types of funds available and a summary of the regulations applicable to the formation and operation of Luxembourg investment funds. It also covers the regulations applicable to management companies and AIFM based in Luxembourg, and provisions applicable to other service providers.
The 500 page publication may be downloaded from the EY Luxembourg website: ey.com/lu
About EY
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For more information about EY Luxembourg, please visit www.ey.com/lu.