Luxembourg’s fund sector grew steadily in 2024, driven primarily by the alternative Investment Fund (AIF) industry, according to a new report released on Wednesday by Luxembourg for Finance (LFF).
Assets under management (AUM) of mutual funds and AIFs combined grew by 11.5% to exceed €7.3 trillion. For this LFF took into account data for AUM of undertakings for collective investment (UCIs) from the CSSF and AUM of non-authorised alternative funds from the Central Bank of Luxembourg.
Growth was strongest in AIFs which grew by 13%, according to the data. AIFs now at an AUM of €1.5 trillion, represent a fifth of Luxembourg’s total fund industry. AIFs include private debt, real estate, infrastructure and private equity funds.
Luxembourg is already Europe’s largest fund management centre and is looking to strengthen its foothold in the AIF segment. Seven new authorised AIF managers (AIFMs) registered last year, bringing the total up to 48.
The AUM of AIFs in Luxembourg has increased from €625 billion in 2016 to €993 billion by the end of 2023.
‘The entire alternatives space is open’: the future of Luxembourg’s fund industry
“Growing investor demand for diversification, including in private assets, has provided significant tailwinds for Luxembourg. Building on its existing strengths and continuing to expand its expertise in areas such as alternative funds, corporate banking and digital assets, the country is effectively positioned to meet evolving investor preferences, demonstrating adaptability that goes beyond mere resilience,” said Tom Théobald, CEO of Luxembourg for Finance, in a press release.
Insurance growth
The insurance sector also saw growth in 2024 with life insurance premiums surging 41%, LFF noted. This was driven by a 72% increase in classical life insurance premiums and 29% increase in unit linked life insurance premiums.
Non-life insurance premiums and reinsurance premiums both increased 4%.
Sustainable finance
Sustainable bond issuances hold steady in 2024 despite ESG slowdown
Luxembourg also showed growth in sustainable finance. The Luxembourg Green Exchange listed more than 2,300 bonds that were green, social, or sustainability-linked bonds. These combined to total €1.2 trillion by the end of 2024
The country continued to solidify its role at the forefront of sustainable finance. The Luxembourg Green Exchange listed more than 2,300 Green, Social, Sustainable, and Sustainability-Linked (GSSS) bonds totalling approximately €1.2 trillion by the end of the year. Luxembourg thus continues to consolidate its position as the world’s leading centre for GSSS securities.