The region has retained its place as the top European domicile, attracting 42% of the sales of European regulated funds, which is twice as many as the second most popular domicile: Dublin.
However, the association said it is now seeing signs that countries are trying to seal their markets off from foreign competitors, which it said is a “growing risk” for Luxembourg’s fund industry.
Speaking at a roundtable in London, ALFI chairman Marc Saluzzi said: “There is enough room for a number of fund domiciles to emerge.
“A lot of countries around the world, like China for example, have observed Luxembourg and realised the value of being a fund centre, but for those with these ambitions it will be a long and painful process.
“We are not afraid of these emerging domiciles. We believe competition is healthy and as long as we can maintain what we are doing then we will have a bright future.”
Experts have claimed the introduction of schemes, such as the Asia Region Funds Passport (ARFP), could also pose a threat to the Grand Duchy’s fund industry, as increased flexibility means asset managers might opt to set up in Asia instead.
However, Saluzzi said: “We are not overly concerned about these initiatives; firstly because it can take years for them to become a success in Europe, as we saw with UCITS.
“It’s one thing to set up a scheme and another to make it work,” he added.
“Secondly, it’s our aspiration is to participate in as many Asian markets as possible, not to dominate the Asian stock market; dominating market shares is not sustainable.”
Despite this developing trend in emerging fund domiciles, Saluzzi pointed to the “significant growth” in UCITS amongst non-European players, with an increasing number of fund managers starting out with funds in Luxembourg.
“The fact that they are looking to Luxembourg to support their global ambition gives us a sense of confidence,” he said.
Meanwhile, Luxembourg’s fund industry is now turning its attention to new markets, including Brazil, Mexico, Australia and China.
There is also a strong interest in alternative investments in the region’s fund centre following the introduction of the Alternative Investment Fund Managers Directive.
ALFI hopes to create an “ideal balance” with the types of funds being invested in, including alternative and socially responsible products, in order to increase the diversification of Luxembourg’s business model.
