Luxembourg UCITS emerging as global brand – ALFI’s Voss

Expert Investor

Voss, who was elected the president of the Association of the Luxembourg Fund Industry (ALFI) last week, said asset managers from places as far afield as China, Brazil and Chile were coming to Luxembourg to set up UCITS funds for distribution back into their own countries.

They were also looking to tap into the global distribution networks available from Luxembourg, Voss said in an interview with International Adviser.

“Luxembourg UCITS are distributed in over 70 countries. Chinese asset managers and the like see that as an opportunity to distribute globally their skill in their own countries,” Voss said.

Undertakings for Collective Investment in Transferable Securities, or UCITS, are a set of European Union Directives that allow investment funds to operate freely throughout the EU on the basis of a single authorisation from one member state.

According to data from the European Fund and Asset Management Association (EFAMA) net sales of UCITS schemes in the first quarter of 2015 were €285bn (£203trn, $182trn) compared with just €49bn in the last quarter of 2014.

Overall net assets of UCITS funds were up 15.4% to €8.2trn at the end of March 2015, the EFAMA data showed.

“We see Luxembourg as the international global fund centre. It’s not why Luxembourg, it’s why not Luxembourg?” Voss said.

China arrives

Voss noted that six of the largest Chinese banks now have their European headquarters in the Grand Duchy, and one of these banks is the eurozone clearing bank for renminbi.

A handful of Luxembourg funds have also been approved to use Stock Connect, a program which provides mutual trading access between the Shanghai and Hong Kong stock markets, enabling a UCITS fund to invest directly in A-shares listed on the Shanghai stock exchange.

Luxembourg also has its own renminbi quota, although the government has yet to decide how it will be allocated.

“There’s a working group at the government, and ALFI is a member of that group, and they are working out the practicalities of how to use it,” Voss said.

Voss said ALFI is also engaging, along with EFAMA, with the European Commission in Brussels to have discussions with the Chinese regulators to see eventually whether there could also be mutual fund recognition between Europe and China.

“ALFI will make sure it stays on their agenda to do,” Voss said.

Part of the Mark Allen Group.