The development of the UCITS framework and this year’s introduction of UCITS IV, which came into effect on July 1, will serve to enhance Luxembourg’s position as Europe’s largest
The development of the UCITS framework and this year’s introduction of UCITS IV, which came into effect on July 1, will serve to enhance Luxembourg’s position as Europe’s largest centre for investment funds. That’s the opinion of Michael Sanders (pictured), chief executive of Alceda Fund Management. With more than 3,800 investment funds and net assets of nearly EUR2.1trillion it’s fair to say that Sanders is only fairly solid ground here. Luxembourg is second only to the US, the world’s biggest fund domicile, in terms of overall AUM. Others share Sanders’ optimism. He writes: “I have met fund managers from all over the globe, including the US, Russia, India, Asia and the Middle East, who are all keen to set up Ucits funds in Luxembourg.” The reasons are numerous but chief among them is that it has one of the best infrastructure set-ups for investment funds, where service providers like Alceda Fund Management can be easily outsourced to help set up UCITS efficiently. Custodians, administrators, auditors, law firms: all have a strong presence there. And it’s this wealth of experience, in Sanders’ view, coupled with a “business-oriented regulatory environment” that puts Luxembourg in a strong position.
Another key point is that it was the first country to integrate UCITS IV into local legislation, way back last December. This, notes Sanders, gives managers confidence in the domicile. “The extension of the passporting system…as well as the admission of master-feeder structures to the regime, is likely to prompt firms to concentrate all their resources in a single location instead of having them spread around the continent,” he writes. Take into account the fact that many Asian markets and Latin American markets like Chile and Brazil have a strong appetite for these funds and it’s fair to say that Luxembourg’s service providers have a lot to be bullish about going forward.