US Managers Starting To Dominate Luxembourg Investment Fund Sector

by Ulrika Lomas, Tax-News.com, Brussels

30 April 2001

The latest survey of Luxembourg investment funds from fund research group Fitzrovia International shows that more than 20% of the $1.2 trillion sector is now controlled by US investment houses which have placed funds under management in the jurisdiction. The US-controlled funds are valued at $240bn, up 50% from last year's $160bn.

Commented Fitzrovia:: "When the US market first turned to Luxembourg in the early 1990s, they really only made up a small proportion of the business. But their position has been increasing impressively as expansion into Europe by US banks continues."

Reflecting the increased US presence is JP Morgan Chase's ranking as the new number one custodian, and the second administrator, ranked by fund assets. Last year UBS Fund Services led the custodians' ranking, and is still the largest fund owner (promoter) ranked by net assets, at $82bn, although US fund management companies as a group had $97.9bn worth of assets in Luxembourg equity funds, the largest national share. Investment in equity assets increased 14.5% between 1999 and 2000, with investment in mixed equities and bonds increasing 21.1%. Investment in cash and short-term assets, and in bonds, both fell, by 6.4% and 3.7% respectively. Fortis Investment Management retains its place as manager of the most Luxembourg-domiciled funds, with 258 funds.

The total number of funds and sub-funds domiciled in Luxembourg has risen by nearly 20% to 6,873. "There is an increasing range of funds being offered, with a particular shift towards specialist funds. The number of funds is increasing across the board, because Luxembourg is an attractive domicile for anyone who wants to get into Europe," says Fitzrovia.

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