According to the latest statistics released by the CSSF, the total net assets for regulated funds in Luxembourg amounted to more than EUR5 trillion as at 31 January 2021, representing an increase of some 5% compared to the same period in 2020.
The recent Openlux attacks on Luxembourg show that, as a small country, Luxembourg will have to continuously justify why it is doing so well. However, the success of Luxembourg as a financial centre is more testament to the strong regulatory and operational environment that Luxembourg has created and less to any alleged tax advantages to doing business here. In recent years Luxembourg has proved itself resilient and has fully embraced transparency and exchange of information. Its willingness to adapt and change will ensure that in the coming years the industry will continue to thrive.
One thing the pandemic has done is focus attention on environmental issues. This has coincided with the EU’s sustainable finance action plan, which, of course, doesn’t just focus on climate related issues but also on social considerations such as inequality and inclusiveness and governance matters. The EU’s push to ensure ESG considerations are taken into account in financial decision-making aligns with the increased focus of investors on sustainability and a more long-term perspective to investing.
Flows into sustainable funds have increased in recent years.
That is expected to continue as the mainstream evolve and adapt to the new legislative requirements. The scale of adaptation is huge, and managers are moving at different paces.
Investor demand for products that have a long-lasting positive impact on the economy and society will ultimately determine success, but ESG will remain a focus of the fund industry for years to come.