Luxembourg-domiciled fund assets grew by 24% to $2,673 billion (1,924.5 billion) over the year to the end of 2009, up from $2,152 billion (1,548.1 billion) in 2008, according to the latest fund survey from Lipper.
JPMorgan Bank remained the dominant fund administrator by total net assets ($388.2 billion), with RBC Dexia in second and State Street moving up into third place.
The domicile looks set to benefit from the increasing interest in UCITS funds from investors, most notably from hedge funds creating UCITS vehicles – or ‘Newcits’. According to data from Hedge Fund Research, there are now more than 200 Newcits funds, with demand continuing to grow. According to KdK Asset Management, 80% of established fund of hedge fund providers intend to launch some form of UCITS-investing vehicle over 2010.
Recent launches include Swiss private bank Pictet & Cie launching a Ucits III-compliant hedge fund, and Portuguese bank Grupo Banco Esprito Santo has launched a fund of Ucits III hedge funds. Both will be domiciled in Luxembourg.
Ed Moisson, director of Fiduciary Operations at Lipper, said: With cross-border fund groups enjoying the greatest sales flows in 2009, the Luxembourg industry as a whole has benefited. While the ripple effects from the financial crisis are still being felt, there are a range of issues that the cross-border industry, and Luxembourg at its heart, will need to address as it re-builds for the future.
At present, Ucits funds are worth $6 trillion, but only $30 billion is invested in alternative strategies.