- The Grand Duchy is the second largest fund domicile in the world after the USA and manages some €5 trillion
- Each year, the Luxembourg fund industry contributes approx. 6% to the GDP
- About half of the government’s tax revenue from the financial sector (€4 billion) stems from the fund industry
- Luxembourg is a world leader in investment funds, representing 58% of the market for cross-border UCITS funds
Investment funds offer a way of investing money alongside other investors in order to grow money and benefit from the advantages of investing as part of a group. Investment funds are managed by professional asset managers, who choose the type of assets in which they invest the group’s pooled money in order to achieve the best return. For an individual investor, investing in such funds is much safer than buying individual stocks. Typically, an investment fund is used for long-term savings or to secure a further pension for the later years.
With €7.7 billion a year, the Luxembourg fund industry contributes to approx. 6% of the GDP and generates 10% of the country’s fiscal revenues.
About half of all fiscal revenues generated by the financial sector (€4 billion) stem from the fund industry, with fund vehicles alone generating fiscal revenues of €1 billion through the subscription tax (taxe d’abonnement). The fund industry is therefore crucial for the development of our economy, for the national budget and thereby also crucial for the well-being of the inhabitants of Luxembourg. Today, Luxembourg is the second largest investment fund hub in the world (second only to the US) and manages €5.05 trillion of assets.
How has Luxembourg perform so well in this sector?
In April 1988, Luxembourg became the first country to implement the EU Directive on UCITS (Undertakings for Collective Investment in Transferable Securities) and regulated products for retail investors.
Luxembourg quickly understood the potential of UCITS as an investment product that could be sold across the EU from one location. Our know-how and our language culture contributed to this huge success. Where else can one find a workforce that speaks so many languages, who can easily address and professionally advise clients across the EU?
The Grand Duchy remains a global pioneer in investment funds: today it represents 36% of global UCITS assets and 58% of the cross-border funds market.