Unregulated Luxembourg funds shows biggest growth

Unregulated investment funds in Luxembourg, in particular Reserved Alternative Investment Funds known Raifs, showed the biggest increase the Grand Duchy’s fund industry last year. According to the latest Monterey Insight report, the value of these funds increased 71.4 percent last year to some 330.8 billion euro.

Other unregulated funds, such as LuxLPs and Soparfi’s, reached a value of 470 billion at the end of 2021. That is an increase of 61.5 percent in assets.

Total net assets for regulated collective investment funds domiciled in Luxembourg increased from 6,145.3 billion dollars in 2020 to 6,685.3 billion dollars.. This represents an increase of 8.8 percent in US Dollar, or a rise of 17.1 percent when measured in euro, from  5,022.5 billion euro  in 2020 to 5,879.0 billion in 2021. 

Regulated funds such as Ucits, SIFs and Sicars enjoyed a steady increase of asset value: 9.6 percent for Ucits;  5.9 percent for Sicards and 5.8 percent for SIFs. This is slightly lower than the previous year, said Monterey. 

Nearly one third more unregulated funds

The overall number of regulated funds and sub-funds reached 14,404 in 2021, showing a small  decrease compared to the previous year. However, the unregulated funds show some of the best  performance with an increase of 27.7 percent coming to 4,175 funds and sub-funds. 

In more detail, RAIFs registered an increase of 33.7 percent in the number of sub-funds active during the  year, reaching 2,045 funds and sub-funds. LuxLPs and Soparfi combined numbers of funds and sub funds reach 2,130 which represents a 22.4 percent increase compared to 2020. 

In terms of products, as was the case in the previous year, for regulated funds, equity fund products  are once again the most popular when measured by assets under management - at 2,404.8 billion dollars - exceeding bond funds which have assets of 1,671.2 billion dollars.  

Newly launched funds and sub-funds as at 31 December 2021 reached 118.8 billion dollars with 873  regulated funds and sub-funds. Looking at the overall numbers and including unregulated products,  the new business reached 188.3 billion dollars, with 1,571 funds and sub-funds. 

600 sub-funds under Article 9

EU SFDR data, newly reported as of 31 December 2021, across all types of Luxembourg funds  (regulated and unregulated), revealed 600 sub-funds were listed under Article 9 with 344.41 billion dollars in assets and 3,740 sub-funds under the Article 8 totalling 2,617.0 billion, Monterey said.

Interestingly out of the  newly launched funds, 28.0 percent were launched under Article 8 and 5.8 percent under Article 9. The figures when looking at newly launched regulated Luxembourg funds only, reach 38.5 percent under Article 8 and  8.7 percent under Article 9. 

Non-domiciled funds in Luxembourg, also a new addition to the Monterey Luxembourg Fund Report in 2021,  totalled 755.7 billion dollars with over 1,350 sub-funds. 

Turning to the service providers, for fund manager companies, the top two positions remain  unchanged with the largest promoter/initiator of Luxembourg regulated domiciled schemes being J.P. Morgan. Amundi secures second position with BlackRock rising to third position. DWS International followed closely in fourth position.

JP Morgan AM remains top ManCo/AIFM

Among Luxembourg-based ManCo/AIFM rankings of regulated schemes, J.P. Morgan Asset  Management (Europe), as has been the case for several years, retained their top position followed by BlackRock who soared up to second from fifth place. DWS Investment dropped one place to third and UBS Fund Management  (Luxembourg) followed closely in fourth position.

This year again State Street maintained their lead position for all the three rankings of fund  administration, custody and, together with IFDS, transfer agent. The top positions remain unchanged for fund administration ranking: State Street is first by total net  assets (US$1,395.2bn) followed by J.P. Morgan Bank in second position (US$1,066.7bn) and BNY  Mellon (US$457.5bn) ranked third ahead of CACEIS (US$431.7bn) in fourth. 

State Street still top custodian

Amongst custodians/depositaries, State Street again secure this year the top position with the  largest proportion of assets under custody totalling US$1,403.0bn, followed by J.P. Morgan Bank  with US$1,240.2bn and in third position Brown Brothers Harriman (BBH) with US$519.1bn. BNP  Paribas followed in fourth position with US$513.3bn. 

Looking at transfer agents ranking, there are no leading positional changes since last year: IFDS /  State Street top the rankings with US$1,356.6bn of assets followed in second position by RBC  Investor Services Bank with US$787.1bn. CACEIS maintain their third position with US$526.6bn  ahead of J.P. Morgan Bank with US$478.2bn. 

Amongst audit firms, as has been the case for several years, PwC maintain their lead in auditing with a total of 6,179 sub-funds, ahead of KPMG with 2,832 sub-funds. EY keep their third position with  2,683 ahead of Deloitte with 2,139 sub-funds.

Monterey Insight Rankings 2022

3 KPMG 1,116.8 1,233.8

Source: Monterey Insight, Luxembourg Fund Report.