The tide turns for investment funds
2009 was a good year for investment funds:assets under management increased by18% after a very difficult year in 2008, reports ALFI. Key objectives for the year ahead are to be more attentive to what investors say and to strengthen the promotion of Luxembourg funds.
In 2009, assets under management in Luxembourg rose by 18%, or 281 billion Euros. Of this, 70% (197 billion Euros) is due to the financial market rebound and 30% (84 billions) to net new subscriptions. "This fresh money coming in shows that Luxembourg remains a location of choice for investors," notes Claude Kremer, Chairman of the Association of the Luxembourg fund industry (ALFI), speaking at a press conference.
"After a difficult year 2008, the trend was reversed in 2009," says Camille Thommes, director general of ALFI. Half of the asset decline in 2008 has been recuperated. At 31 December 2009 there were 3,463 fund units domiciled in Luxembourg, an increase of almost 3% on the previous year.
Growth in the number of UCITS funds has been modest. Camille Thommes attributes this to “the financial crisis and consolidation in the sector, but also promoters restructuring their product lines”.
ALFI also spoke about its Action Plan for 2010. Citing five challenges, Claude Kremer highlighted the concern to be more responsive to investors, which he stressed was one of the lessons to be drawn from the crisis.
"We have noticed that there is a discrepancy between what the promoter thinks he is putting into a fund and what the investor thinks he is buying”. In the coming weeks, ALFI will launch its new website which has been designed to explain investment funds to investors.
Long term relationships create customer loyalty
The opening of a representative office in Hong Kong is another of ALFI’s ambitious goals. "Asia is going to be the most important market in the future. Hong Kong is a recognised platform and is close to China. Many foreign funds are registered there, and half of them are from Luxembourg” says Claude Kremer.
The Luxembourg fund industry employs 13 000 people and contributes 12% to government revenue. ALFI’s objective is to improve the competitiveness of the sector by increasing its critical mass. Aware that competition between financial centres is becoming tougher, ALFI appealed to government to maintain a competitive legal and tax framework.
ALFI welcomes the AIFM-Directive and the goal of creating a harmonised regulatory framework for alternative products such as hedge funds and private equity funds. Claude Kremer commented that prudential supervision had always existed in Luxembourg. ALFI’s objective is for the Grand Duchy to be among the first to implement the new directive.