Luxembourg under pressure in cross-border investment fund market

Luxembourg-domiciled cross-border investment funds remain essential to the country’s financial centre, accounting for over 52% of all Luxembourg registrations, but the Grand Duchy faces increasing pressure from Ireland, which is the second-largest destination for such funds, according to PwC Luxembourg.

In 2024, cross-border registrations of investment funds continued their steady growth, reaching just over 143,200 worldwide by year-end, PwC said in a press release on Tuesday, publishing the 25th edition of its Global Fund Distribution poster.

Since 2014, the total number of registrations has nearly doubled from roughly 83,500 to 143,244. Despite this consistent growth in registrations, the number of cross-border funds experienced its first decline since 2014, with 14,649 funds, marking a 0.5% decrease from the previous edition of PwC’s study, which tracks fund distribution trends across more than 40 countries. A number of funds have been consolidated or merged, which explains the decrease.

Half of cross-border funds are equity funds and a further 28% are bond funds. ETFs continue to gain market share, at 32% of all cross-border funds and 37% of registrations.

New registrations

Christophe Saint-Mard, Partner for Global Fund Distribution at PwC Luxembourg © Photo credit: PwC Luxembourg

“The global fund distribution landscape is undergoing a structural transformation. While the number of cross-border investment funds declined for the first time since 2014, the 1.9% increase in registrations reflects a trend of fund range rationalisation, where asset managers are prioritising larger, widely distributed funds while consolidating underperforming ones,” Christophe Saint-Mard, partner for global fund distribution at PwC Luxembourg, said in the release.

Private markets continue to grow strongly, he added, with European assets over €4 trillion and strong investor demand for alternatives “Luxembourg continues to lead in private market [assets under management], accounting for more than half of Europe’s total,” Saint-Mard said.