Luxembourg, one of the smallest countries in the world, one of the world top three investment fund centers: Will it survive?
Independent thesis Advanced level (degree of Master (One Year)), 10 credits / 15 HE creditsStudent thesis
One of the world’s smallest countries, Luxembourg, is competing in the major league in the administration of investment funds in terms of total net assets under administration. Only the USA and France are currently bigger than the small Grand Duchy Luxembourg in this business area. After many years of continued growth of net assets under administration in the Luxembourg fund industry, the industry suddenly suffered a significant decline in assets during the year 2002, which came as a chock to many market participants. Several started to ask themselves questions about the future of Luxembourg. Was it the beginning of an end to a glorious era? Or what was happening? This will be described and analysed in this thesis. The results will show that the competition is indeed getting tougher, the evolution of the world’s stock markets has had huge negative impact, but the investors and the promoters maintain strong confidence in the Luxembourg fund market. Furthermore we will conduct a survey amongst important market participants from various industrial perspectives in a view to describe the threats and opportunities for the Luxembourg fund industry now and in the future. The qualitative data from the survey will show that the Luxembourg fund industry is largely impacted by its ability to adopt structural and regulatory changes on a European level as well as its ability to innovate new products and fund structures. The main threats are expected to come from the neighbouring EU countries, some of which are currently liberalising their legislation for the administration of the investment funds. The conclusions to this thesis will demonstrate that the decrease for the Luxembourg fund industry during 2002 was not so alarming anyway. The decrease in the worlds principal equity markets did hit the performance of the Luxembourg fund industry hard, for the first time in its history. However the strong promoter and investor confidence contributed substantially in the opposite direction. Already in 2003 the Luxembourg fund industry picked up again and from very recent figures published by the regulatory body, the Luxembourg fund industry just passed 1 trillion EUR in assets in February 2004. It seems like the traditional cash cow for Luxembourg, the ‘normal’ UCITS is maturing. However this has already been realised by the market players and Luxembourg is now concentrating on repositioning itself as an attractive market for vehicles such as hedge funds, venture capital funds, and private equity funds, real estate funds, securitisation funds etc.Will it survive? The results and conclusion of this thesis will show that the Luxembourg fund industry is currently in good shape and ready to face the challenges in the future.
Place, publisher, year, edition, pages
IdentifiersURN: urn:nbn:se:su:diva-4628OAI: oai:DiVA.org:su-4628DiVA: diva2:194207