Luxembourg Company Formation

Luxembourg UCI assets continue upsurge, hit €5.585trn in March 2024

Luxembourg’s market regulator said that investment funds in the country witnessed a 1.7% increase in net assets in March, continuing a trend observed over the past six months, with total net assets reaching €5.585trn as of 31 March 2024.

The Luxembourg Financial Sector Supervisory Commission (CSSF) announced on Tuesday 30 April 2024, that the total assets under management in Luxembourg-based undertakings for collective investment reached €5,485.248bn as of 31 March 2024. This represents a 1.7% increase from the €5,393.311bn recorded at the end of February 2024. The AUM growth encompasses various fund types, including mutual funds, specialised investment funds (SIFS), and investment companies in risk capital (SICARS) for March 2024.

The press release noted a net monthly increase in assets of €91.937bn. This growth was achieved through the sum of positive net capital investments of €1.844bn, up 0.03%, and the positive development of financial markets amounting to €90.093bn, up 1.67%, month-on-month.

Equity markets

According to the market regulator, amidst a backdrop of robust bullish momentum in equity markets worldwide, the strong gains observed in preceding months have been largely propelled by a dovish stance from central bank officials. This trend has been particularly notable in several developed countries, including Japan and those in the European Union and North America, which have outperformed their emerging counterparts. The resilience of the US economy and enthusiasm surrounding artificial intelligence continue to bolster US equities, while in Europe, the segment benefits from indications of improving business activity, further supported by companies exceeding earnings expectations. The Asian market presents a more varied picture, with China’s sluggish economy contrasting with the upward momentum in countries, notably South Korea and Taiwan, that are heavily exposed to high technology. Other markets have seen positive movements driven by discussions surrounding the pace and sequence of anticipated monetary policy easing.

In March, all equity UCI categories experienced negative capital investments, resulting in outflows, stated the CSSF.

Fixed income UCIs

As per the press release, fixed income UCIs demonstrated positive performance across all categories, driven by favourable macroeconomic fundamentals and a slight decrease in government yields. Investors in credit markets are primarily reliant on central bank actions in the upcoming months, and March witnessed a positive change in the disinflation trend and expectations of interest rate cuts, with the European Central Bank now anticipated to act as the first mover in the cuts cycle over the Fed in the US.

In March, fixed income UCIs recorded an overall positive net capital investment, primarily due to significant inflows in money market UCI categories, except for USD money market.

Structural changes

In March, the UCI industry experienced minor adjustments, revealed the latest report. The total number of UCIs slightly decreased from 3,260 to 3,251. This adjustment comprised the introduction of seven new collective investment undertakings and the deregistration of 13 from the official list. Within the sector’s composition, there were 2,124 entities structured under an umbrella, encompassing 12,777 sub-funds. Additionally, 1,127 entities maintained a traditional UCI structure, resulting in a total of 13,904 active fund units within the financial centre as of March 2024.