The report conducted by Lipper FMI and commissioned by the Association of the Luxembourg Fund Industry on the evolution of Ucits since 1988, found that the compound annual growth rate for these funds over the next five years is expected to be a European average of 6.8%. However, this is a slowdown in growth compared with the 12% growth rate achieved in the early 1990s.
This growth rate will result in assets under management of between €6.8trn and €8trn by 2014.
Luxembourg will remain a centre of excellence for funds as the Ucits world evolves and growth there for the next five years is expected to be 10.4% giving it 38% share of all European assets, or €2.6trn.
The barriers to entry in most foreign markets have fallen and 15% of European fund assets are now derived from third-party distributors in foreign markets, the report said this could more than double by 2020.
Luxembourg’s evolution has benefited from trends that favour cross-border business as well as providers’ desire to concentrate their activity in a single centre of excellence. However, decisions about location are now as likely to be home centered as host centered as domestically-based funds seek access to foreign markets. Despite this, Luxembourg’s position as a politically neutral and dedicated centre will remain important.
Furthermore, in most countries in Europe the local industry promotes Luxembourg funds alongside home-domiciled products. The weighting of Luxembourg products in countries such as Switzerland, Germany and Italy is about 50% of assets, the report said.
The 60-page report may be downloaded from Alfi’s website at www.alfi.lu.
