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Luxembourg fund assets down nearly 30 per cent during 2008

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Luxembourg-domiciled fund assets fell by nearly 30 per cent to USD2,152.0bn (EUR1,548.1bn) over the year to the end of 2008, down from USD3,024.2bn (EUR2,068.3bn) in 2007, according to

Luxembourg-domiciled fund assets fell by nearly 30 per cent to USD2,152.0bn (EUR1,548.1bn) over the year to the end of 2008, down from USD3,024.2bn (EUR2,068.3bn) in 2007, according to analysis by Lipper.

The extent of the decline is exaggerated by the fact that the calculations are in US dollars, which fell significantly against the euro last year. According to Lipper’s figures, the decline was 28.8 per cent in USD terms but 25.1 per cent in euro terms.

The number of funds rose from 10,971 to 12,102 – an increase of just over ten per cent.  Lipper says this highlights that there is still sustained interest in Luxembourg as a jurisdiction, even during turbulence in financial markets.

JPMorgan Bank maintained its position as the largest fund administrator by total net assets (USD300.7bn), with RBC Dexia (USD163.5bn) and Fastnet (USD157.7bn) in second and third places.

For professional firms, PricewaterhouseCoopers sustains its dominance in auditing 5,337 funds. This is followed by KPMG (2,289 funds) and Ernst & Young/Cie de Revision (2,165 funds).

Among the legal advisers, Arendt & Medernach was just ahead of Elvinger Hoss & Prussen by number of funds, however Elvinger Hoss & Prussen has maintained its leading market share by total net assets.

For custodians, JP Morgan Bank was in top position with USD349.1bn net assets, followed by State Street (USD165.1bn) and RBC Dexia (USD162.0bn).

Specialised investment funds contributed USD179.6bn in 1,712 funds. This total is slightly down on last year’s total (USD205.4bn), but still considerably up on that for funds under the previous law (USD104.7bn in 2006). 

Lipper says the diversified range of asset classes in Luxembourg has ensured that there have been some resilient areas. For example, money market funds rose by 16 per cent to USD561.9bn and ETFs rose by 59 per cent to USD32.0bn.
 
Ed Moisson, director of fiduciary operations at Lipper, says: ‘Half of the decline in fund assets took place in September and October, highlighting that the financial crisis was the key factor affecting the industry. Around 80 per cent of the overall asset fall was due to market performance, rather than investor withdrawals, which provides some hope that as the markets recover, so too will the Grand Duchy’s fund assets.’

According to the Luxembourg regulator, the CSSF, the decline in fund assets was 24.3 per cent and total assets at the end of last year were EUR1,559.6bn. Lipper says the discrepancy could be caused by exchange rate differences and its treatment of some funds that were inactive but still authorised at the year-end. In addition, it says Lipper’s Luxembourg Fund Encyclopaedia is a usable database where underlying fund-level data can be interrogated by clients. As a result, it needs to be able to assign individual funds to fund assets, rather than only providing a consolidated industry figure.

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