The Luxembourg fund industry has been set back three years by the coronavirus crisis. Assets held in funds domiciled in Luxembourg shrunk by a record €526 billion in March, according to figures provided to Investment Officer by Morningstar.
The unprecedented decline in assets invested in Luxembourg-domiciled Ucits funds means total assets are now back at just over €3 trillion (excluding money market funds), comparable to the level observed in April 2017. At the end of January 2020, before the coronavirus hit markets, assets had reached a record high of €3.66 trillion.
Falling asset prices have accounted for the bulk of the decline in total assets. After net inflows of €16.9 billion in February, net redemptions totalled a record €127.4 billion in March, more than twice the previous monthly outflows record of €52.6 billion, set in October 2008.
All major fund categories, from alternatives to equities, registered record net outflows in March. With one exception: net outflows from commodity funds were ‘only’ €662 million, much lower than the levels seen in October 2008 (-€1 billion). According to Morningstar, these relatively low redemptions were due to increased demand for gold funds during the market rout.