The new total was hit after solid net sales of €45bn ($49bn, £33bn) in the first two months of the year, and follows a strong 2014 when net assets under management (AUM) climbed over the €3trn mark for the first time.
“In 2014, almost 50% of the growth [in AUM] was driven by net sales which shows investors are coming back to investment funds,” said Anouk Agnes, deputy director general of ALFI.
“After many years of very intense regulation, a priority we have this year is to let the asset management industry go back to business,” she said.
Luxembourg has been the largest investment fund centre in Europe and the second largest in the world since 2005, serving as a domicile for around 3,900 funds.
Responsible investing grows
Agnes said another factor in the increase of Luxembourg-domiciled assets has been the rapid growth in European responsible investment funds.
European responsible investment funds saw a compounded annual growth rate in AUM of 25% between 2012 and 2014, rising to €372bn last year from €238bn two years previously, based on a survey of the sector commissioned by ALFI and conducted by KPMG.
Of the 2014 total, €322.8bn was invested in cross-sectoral funds, €31.8bn was in environmental funds, €10.7bn in social funds and €6.7bn in ethical funds.
Cross-sectoral funds invest in multiple sectors using either negative screening or simple exclusion strategies, such as tobacco or arms, or positive screening by selecting, say, “best in class” strategies or companies with an engagement policy.
“Responsible investing is growing in popularity,” Agnes said. “With the rising demand from clients seeking to invest in companies, organisations and funds which aim not only to achieve a financial return but to also generate measurable social and environmental benefits, the asset management industry is broadening its range of options.”
The survey of the responsible investing sector, which remains difficult to define, found it was still largely being driven by institutional investors such as insurance companies and pension funds, while the retail market remained untapped.
“It is clear that the whole growth is driven by institutional investors,” said Jane Wilkinson, head of sustainability at KPMG Luxembourg. “There is a very, very small proportion of the market that is retail, which is a shame.”
Wilkinson said the latest survey found investors were withdrawing funds from asset managers who are not able to offer responsible investing products. She also said it was clear from the survey that asset managers have to offer responsible investing strategies, and that many asset managers in the industry see continuing growth, particularly from institutional investors.
