The number of licensed management companies in Luxembourg has held steady at 298. But this surface stability masks a quiet transformation in the Grand Duchy’s asset services industry.
Smaller and mid-sized management companies are not just surviving. They are expanding teams, opening offices and gaining ground, especially in private markets. This shift is clearest among firms managing between five and twenty billion euros. In 2024, they increased headcount by 22 percent, while the largest firms slightly reduced theirs.
This trend is highlighted in the tenth edition of the ManCo Observatory, a benchmark report on Luxembourg’s management company sector. The study, released this week by PWC Luxembourg, draws on data from 72 firms representing 83 percent of assets under management and 77 percent of sector employment.
According to the report, 13 new management companies were authorised in 2024. Twelve of them were alternative investment fund managers. At the same time, 13 firms exited the market, most holding Ucits-only licences.
“Facing dual challenges in maintaining competitiveness and adapting to regulatory changes, ManCos’ operating models are being reshaped,” said Laurent Butticè, management company leader at PWC.
“This strategic shift reflects a trend towards insourcing core functions to optimise value, while outsourcing operational ones to benefit from regulatory expertise and efficiency. Third-party ManCos continue to offer valuable one-stop-shop solutions, enabling asset managers to focus on their core business.”
Lean and specialized
While the number of firms remained constant, the market’s composition is shifting. The new entrants are lean and specialized, part of a broader trend positioning Luxembourg as a hub not only for Super ManCos, but also for agile, mid-sized firms targeting illiquid and non-regulated strategies.
This comes as global asset managers continue allocating to alternatives. According to PWC, non-regulated alternative funds in Luxembourg grew by 13 percent in 2024, while regulated alternatives increased by 10 percent. Together, they account for 65 percent of the country’s alternative AuM. Luxembourg also retained its position as Europe’s top domicile for European Long-Term Investment Funds (Eltifs), hosting 60 percent of all Eltifs and seeing 38 new launches last year.
While industry headlines often focus on the largest firms, PWC’s data show that mid-sized players are driving hiring, growth and innovation. These firms are building specialised teams in risk, compliance and tax oversight. Those managing five to twenty billion euros now average 23 full-time employees and are expanding into Germany, Italy and Spain to support fund distribution.
Technology
Hiring is only part of the picture. Nearly all firms surveyed—some 91 percent—are working to streamline internal processes through technology. Four out of five already use generative AI tools such as Microsoft Copilot or ChatGPT. Digitalisation budgets are rising: 51 percent of firms managing over fifty billion euros now dedicate more than one million euros to digital transformation, up from 31 percent the year before.
Governance is also evolving. More firms are internalising key control functions. One notable shift is in tax governance, with 25 percent of conducting officers now holding tax responsibilities, up from 15 percent in 2023. This reflects both regulatory scrutiny and investor demand for transparency.
Despite industry-wide cost pressure and consolidation, the outlook is more nuanced. While 75 percent of survey respondents expect more consolidation, 52 percent believe specialised firms will continue to thrive, especially those focused on complex asset classes such as private equity, infrastructure and real estate.
This dual dynamic is reshaping the fund governance landscape. PWC’s observatory confirms that Luxembourg is no longer defined only by Ucits platforms and large-scale asset managers. It is evolving into a two-track model: one serving institutional flows in liquid assets, the other offering tailored solutions for alternatives and niche mandates.
Third-party ManCos
Third-party ManCos reinforce this development. Managing over one thousand billion euros, these firms offer external managers scalable solutions with operational and regulatory support. PWC noted that five of the top ten third-party ManCos have acquired at least one fund administrator since 2022.
The Observatory for Management Companies, now in its tenth year, has become a trusted reference for professionals in Luxembourg. Built on extensive industry engagement, the PWC barometer tracks trends in governance, substance, operating models and digitalisation, serving as a strategic benchmark.
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