Despite the Grand Duchy’s status as Europe’s largest investment fund centre, Luxembourgers hold almost four times more money in bank deposits than in funds.
Since 2008, Luxembourgers have increased their holdings in investment funds as a percentage of their total financial assets only slightly (+2.6 percentage points) to 10%, according to a report on the participation of European households in financial markets, which was published by the European Fund & Asset Management Association Efama.
However, the 15% of assets invested in funds still puts them in shared third place among the EU-28 (including the UK). Only Belgian and Spanish investors invest more in investment funds. On average, European citizens invest 10% of their money in investment funds, up 1.9 percentage points since 2019. Citizens who do invest in investments funds tend to hold a significant percentage of this in funds, though, as only 10% of the European population currently invests.
The share of assets held in bank deposits has come down by only 3.1 percentage points since 2008, despite the fact interest rates on savings accounts currently are at zero in most European countries. On average, European households hold 37% of their assets in bank deposits. For Luxembourg, this figure is significantly higher at 56%.
€1.2 trillion missed
By overinvesting in bank deposits, European investors have forfeited €1.2 trillion between 2008 and 2019, according to a calculation by Efama. ‘If households had actually saved only half of the true amounts they saved in deposits, investing the other half in equity funds and bond funds in equal proportions, during the period 2008-2019, they would have generated a total wealth of €3.2 trillion at the end of 2019,’ Efama said. This compares to an estimated amount of €2.1 trillion that was realised in practice.