PwC Luxembourg's 2019 barometer on management companies (ManCos) is out and the results continue to look positive for both licensed AIFMs and UCITS ManCos based in the Grand Duchy. 83% of participants in the PwC ManCo Survey 2019 said that they see Luxembourg as a future hub for European ManCos.

Observatory for Management Companies Barometer

The PwC ManCo Index measures ManCo’s activities in Luxembourg by considering the growth in the number of UCITS ManCos and licensed AIFMs, the evolution of their Assets under Management (AuM) and the number of employees in UCITS ManCos.  

In December 2018, the Index marked 203 points, an increase of 4.5% over a year and the biggest level ever reached. This growth is mainly explained by a 12% increase in UCITS ManCos employment (4,874 staff as of 31 December 2018). This positive trend in ManCos employment should continue in 2019, with the increased substance requirements following the implementation of the CSSF Circular 18/698 released in August 2018.

Laurent Carême, Director, PwC Luxembourg explains, “This is the fourth edition of the Observatory for Management Companies Barometer along with the poster which we issue once a year and which has become very popular. This year there is again a clear evolution of people employed. The fact that the PwC ManCo Index has increased by 4.5% over the year is mainly driven by the number of staff and we can expect this positive trend to continue into 2019 as ManCos recruit additional resources to fulfil gaps in different functions.”

New entities into Luxembourg

In addition, PwC Luxembourg observes that Luxembourg attracted 19 new entities in 2018, confirming the established position of the country as the preferred Asset Management hub in Europe.

Pierre-Marie Bochereau, Management Company Observatory Coordinator, PwC Luxembourg notes that, “A third of these entities are coming from the UK. We can easily make the link of these new additions as being due to the consequences of Brexit, and, among others, we have seen the arrival of such big players as Jupiter Asset Management International or M&G. One dynamic trend that we have also observed derives from the continuous success of the AIFM Directive. As of December 31, 2018, Luxembourg has 242 licensed AIFMs, representing an increase of 14 over a year. Finally, we observed a positive trend in the requests for MiFID extended licenses (i.e. for discretionnary portfolio management) with more than 20 licenses granted and we expect that this tendency will continue in 2019.”

Assets under Management

The evolution of AuM by ManCos demonstrates a flattening over the one-year period as of 31 December  2017. At the end of December 2018, the total AuM of Luxembourg ManCos (in billion Euros) reached 3,398, whereas of 31 December 2017, the total AuM of Luxembourg ManCos reached 3, 401. This flattening is positive in comparison to the global evolution of AuM in the Luxembourg funds which decreased slightly within the same period (-95 billion Euros).

Top 5 ManCos

One of the reasons that the Barometer has become so in demand is that in listing the top ManCos it allows other companies to benchmark. The top 5 ManCos as of 31 December 2018 (in terms of AuM) are:

1. JPMorgan Asset Management (Europe) S.à r.l.
2. DWS Investment S.A.
3. ? Amundi Luxembourg S.A.
4. ? BlackRock (Luxembourg) S.A.
5. UBS Fund Management (Luxembourg) S.A.

Laurent Carême, Director, PwC Luxembourg  notes that:  “We have observed significant events in terms of the Top ManCos in the form of a consolidation tendency of big players such as Amundi Luxembourg and Pioneer Asset Management in the beginning of 2018 and also the onboarding of Standard Life funds by the ManCo Aberdeen in Luxembourg to create Aberdeen Standard Investments Luxembourg.”

This same consolidation trend has been identified on Third Party Business with several acquisitions during the year, such as:

• The acquisition of SEB Fund Services by FundRock Management Company;
• The acquisition of Sal. Oppenheim Luxembourg Funds by Hauck and Aufhäuser Fund Services;
• The penetration of the market by APEX Group with the acquisition of LRI Invest and Warburg Invest (becoming Augeo Capital Management).

The 2019 barometer is available on the PwC Luxembourg website