Europe keeps faith with investment fund products

Latest figures from Luxembourg show investment by high net worth and retail investors have helped maintain the centre’s reputation as number one destination for pan-European products, writes Roxane McMeeken. Europe’s investors have not lost their faith in investment funds despite dismal economic conditions. The latest figures from Luxembourg – the main centre for European funds marketed in several countries simultaneously – show that E57bn of fresh money was invested in products domiciled in the jurisdiction during 2002. Guy Legrande, president of the Luxembourg funds industry body Alfi, which compiled the data for the recent annual conference, said the best part of inflows came from high net worth and retail investors. The Grand Duchy nonetheless saw a substantial drop in net assets under management last year of 9 per cent. Mr Legrande was quick to point out that this was due to market declines: “Investors have held on completely to their confidence in our products.” The fortunes of Luxembourg’s net assets appear to reflect the poor state of the entire European investment fund industry. The centre saw growth rates of 50 per cent in 1999, 19 per cent in 2000 and 6 per cent in 2001. The 9 per cent decline seen last year leaves Luxembourg products with E844bn. Luxembourg has held on to its position as the number one destination for pan-European products, according to statistics from Lipper, which reveals 77 per cent of funds are domiciled there. However, this is a 3 per cent drop from a year ago. Mr Legrande denied this was due to gains by rival fund centre Dublin and put the drop down to falling markets.