The total net asset value (NAV) of Luxembourg-domiciled money market funds (MMFs) increased by €98bn in 2024, reaching €593bn by year-end, the Luxembourg Financial Sector Supervisory Commission (CSSF) stated in a report on 29 July 2025. This represented a 20% year-on-year growth, driven by continued investor demand for secure, short-term instruments amid elevated interest rates and ongoing geopolitical tensions, notably the war in Ukraine.

The number of active money market funds rose modestly during the year from 111 to 112. These included 97 funds authorised under the Ucits framework and 15 alternative investment funds.

Fund structure shift

The composition of the market saw a slight shift in fund categories. The share of short-term low volatility NAV MMFs increased by four percentage points to 56%, largely as a result of the conversion of a sizeable short-term variable NAV fund. Meanwhile, the share of short-term variable NAV funds declined by six percentage points to 11%. Standard variable NAV and short-term public debt constant NAV funds remained relatively stable at 17% and 16% respectively.

The CSSF noted that the total NAV remained relatively stable during the first half of the year, with a minimum of €508bn in May, before rising steadily to a year-end high of €593bn in December.

US dollar and euro-denominated funds

MMFs in Luxembourg remained heavily weighted towards US dollar-denominated assets, which accounted for €329bn or 55% of the total NAV. Euro-denominated funds made up €186bn or 31%, while sterling-denominated funds totalled €70bn or 12%. Other currencies represented less than 2% of assets.

The report found that US dollar funds rose by €55bn over the year, an increase of 20%, mainly through inflows into short-term low volatility and short-term public debt constant NAV structures. Euro funds increased by €35bn or 23%, also led by low volatility strategies, along with some contribution from newly created constant NAV euro funds. Sterling fund assets increased by €7bn, an 11% gain compared to the previous year.

Despite overall growth, market concentration remained high. The five largest funds accounted for 50% of the sector’s total NAV, a marginal decrease from 51% at the end of 2023.

Professional investors remain dominant

Professional investors continued to dominate, accounting for 83% of assets, compared with 85% a year earlier. The five largest investors held on average 23% of each fund’s assets. Other financial institutions were the most prominent investor group, representing 31% of the market, followed by non-financial corporations at 23% and households at 17%.

In terms of geographic distribution, investors based in the Eurozone held 40% of assets, with the United Kingdom and the United States accounting for 23% and 17% respectively.

Performance declines as rate cuts take effect

Performance across most money market fund categories declined in the final quarter of the year, following the start of monetary easing by central banks in response to easing inflationary pressures. The US Federal Reserve reduced rates three times in 2024, ending the year with a target range between 4.25% and 4.50%. The European Central Bank implemented four cuts, bringing its policy rate to 3.15%. The Bank of England carried out two reductions, lowering rates to 4.75%.

Risk metrics remain stable

According to the CSSF, funds maintained intermediate to high levels of weighted average maturity and weighted average life throughout most of the year. A gradual decline in both indicators began in the fourth quarter, reflecting the end of the rate-hiking cycle which had concluded in the third quarter of 2023. Liquidity remained strong, with average daily and weekly liquid asset levels consistently above regulatory thresholds.

The regulator confirmed that no short-term low volatility NAV fund recorded deviations above the 20 basis point threshold under article 33 of the Money Market Fund Regulation (MMFR). Stress tests under article 28 did not identify any vulnerabilities and no liquidity management measures were triggered for short-term public debt constant NAV or low volatility funds during the year.

High compliance with regulatory reporting

Money market funds have been required to report quarterly since the first quarter of 2020 under article 37 of the MMFR. Funds with less than €100m in assets may report annually. The CSSF stated that around 99.5% of assets were covered by quarterly reports in 2024, including some funds reporting voluntarily.