The number of investment management companies – or mancos – operating in Luxembourg witnessed a decline for the fifth consecutive year, according to an annual survey published by PwC on Thursday.
There were 298 mancos in business in Luxembourg in 2023, three fewer than in 2022. The reduction in numbers was due to a combination of factors, the survey said, including more market consolidation, shift towards third party mancos and the issuance of fewer UCITS licences, which allow investment schemes to operate across the EU.
The total number of mancos operating is now down 5% from 2019 when 317 such companies existed, according to the data compiled by PwC.
Each of the last five years have seen fewer new UCITS licences issued than the previous year. In 2019, 196 new UCITS licences were issued, a number which had dropped sharply – to 163 – by last year.
Although the number of companies and UCITS licences issued dropped, there was a rise in total assets under management in Luxembourg, rising from €5 trillion at the end of 2022 to €5.2 trillion in 2023.
The increase was led by growth of 16% in alternative investments which cover hedge funds, private equity and real estate funds and rises in non-regulated investments, PwC said.
Both regulated and unregulated alternative investment funds have growth substantially in the last few years. In 2023, they accounted for 35% of the total assets under management in Luxembourg, up from 19% in 2019.
Luxembourg mancos see numbers and assets decrease in 2022
Luxembourg continues to be the second-biggest investment fund centre in the world, after the US, and the largest in Europe, accounting for 30% of total EU assets. The Grand Duchy is closely followed by Ireland which has 23% of EU assets, followed by Germany and France at 15 and 13% respectively.
EU laws require fund managers who want to sell to EU investors to appoint a manco, either by setting up their own entity or hiring an outside service provider.
Their key functions include managing risk, ensuring transparency, reporting compliance, providing independent asset valuation and approving the assets in which the fund manager wants to invest.
The PwC study compiled data from a survey of 91 participants, who represent 86% of the regulated assets under management in Luxembourg.