Luxembourg funds continued their recovery from a slight decline in October 2023 by amounting at year-end to 5,285 billion euros, up 2.6% in the month since the end of November. The volume of net assets rose by 5.1% over the past year.
The statistics relate to “undertakings for collective investment” (UCI) subject to the 2010 law, specialised investment funds and Sicars.
The Luxembourg UCI industry was collectively nearly 133 billion euros richer in the month leading up to Christmas/New Year. According to a CSSF report, the figure stems from profits on net capital investments of just over 4 billion euros (only 0.08% up) and a substantial nearly 229 billion euros (2.5%) return from financial markets.
UCI numbers down
The trend for the number of UCIs, however, is downwards, with the number at year-end down to 3,274 from 3,393 the previous month. Adding the 1,127 entities with a traditional UCI structure to the total, 13,981 fund units were active in the financial centre, said the CSSF.
The UCIs benefited from the continued recovery of equity markets in December against the rising optimism over rate cuts next year amid declining inflation figures. It benefited despite ongoing wars and conflicts. US equity UCIs led the way with a “strong performance supported by better economic prospects, as well as a more dovish tone of the Fed compared to the ECB.”
Latin American UCIs also registered a strong positive performance, with all countries finishing the month positively. Europe was positive despite weak economic indicators.
Bonds gain despite headwinds
Nevertheless, the equity UCI categories recorded negative capital investment.
Despite the bond-unfriendly inflation fall, with the prospect of lower yields and credit spreads, both the EUR and USD bond categories made gains in December. Emerging market bonds also had positive returns based on an anticipated US soft landing.
According to the CSSF, fixed-income UCIs had an overall net positive capital investment due to “significant inflows in all the money market UCI categories.” Bond UCI categories recorded mostly limited inflows.
Development of equity UCIs during the month of December 2023*
Further reading on Investment Officer Luxembourg:
- AIFMs increasingly prefer sub-funds over new Raifs
- CSSF asks LDI funds to maintain buffers
- ‘Stunted’ EU fund sector requires more diverse investor base