Luxembourg is by far the leader in global cross-border fund registrations with a market share of 54.6%, a report by PwC Luxembourg has found.
The annual PwC Global Fund Distribution (GFD) Poster was published on Monday and reported that although Luxembourg experienced a minor decline of 0.4% in registrations in 2023, it remains way ahead of second-ranked Ireland, which has a 36.4% market share.
Germany is still the most favoured destination for Luxembourg’s cross-border funds, followed by Switzerland, France and Austria. But there has been a surge in registrations in Spain, as investors seek exposure to international markets, according to Robert James Glover, Advisory Partner for Global Fund Distribution at PwC Luxembourg.
“The appetite for global diversification is undeniable,” Glover stated. Equity funds remain the clear favourite, accounting for 50% of cross-border assets. “Interestingly, Ucits funds continue their reign supreme, with Luxembourg leading the pack,” Glover said. Ucits account for 91.6% of global cross-border funds, with Luxembourg having a share of 54.5%, followed by Ireland at 32.0%.
Luxembourg and Ireland collectively manage €7.5 trillion in Ucits assets out of the €13.1 trillion European Ucits market in 2023.
“While non-Ucits haven’t reached critical mass yet, the rising market share in key jurisdictions such as Luxembourg and Ireland suggests a potential shift on the horizon,” Glover said. Luxembourg and Ireland also gained market share of 0.6% and 1.0% of non-Ucits respectively in 2023.
“We saw a balanced increase of 0.9% in both cross-border ETFs [exchange traded funds] and mutual funds, and the number of registrations grew by 1.6% compared to last year,” Glover continued. “To that end, the distribution landscape shows remarkable resilience, with growth continuing despite the headwinds of a volatile macroeconomic environment impacting the global cross-border fund distribution.
Luxembourg also remains the unchallenged leader, ahead of Ireland, in sustainable finance, with 62.7% of true cross-border funds under SFDR Article 8 and a 66.1% share of funds under SFDR Article 9. Ireland is the only other jurisdiction that reached a double figure market share, at 24.9% and 22.2% respectively.
The poster also ranks true cross-border management groups, which shows Franklin Templeton and BlackRock maintaining their dominance with Fidelity Investments, UBS, and JP Morgan moving up the ranks among top asset managers.