PwC Luxembourg recently held its 'Club de l'Asset Management Français au Luxembourg', gathering around fifty French asset managers for an overview of the latest trends, particularly in terms of the digitalisation of the sector.
The Grand Duchy has continued to preserve its AAA credit rating, and with a stable position, an international focus and expertise, asset managers worldwide have been seduced by it. France is no exception and has long developed close ties with Luxembourg. With 8% of Luxembourg's asset management market share at the end of 2014, representing more than €250 billion of assets under management, French developers are firmly established in Luxembourg.
Luxembourg accreditation enables for a vehicle to reach a very wide non-domestic clientele base, whilst the Luxembourg Sicav allows asset managers to accommodate a wide range of their expertise through a European passport.
"For several months, the various French actors took full measure of the possibilities and benefits of various regulations such as UCITS IV and AIFMD," stated Emmanuel Chataignier, partner in charge of the French asset management market at PwC Luxembourg. "Thus, multiple funds of French promoters have been recently launched in Luxembourg whilst being managed from their Parisian management company and a multitude of master-feeder structures between France and Luxembourg have materialised."
PwC Luxembourg reported that another strong indicator of French business in Luxembourg has been that the number of funds and management companies are on the increase. 27 management companies and more than 1,280 compartments, managed by French developers, were located in Luxembourg in late 2014.
"Significant rationalisation movements that have occurred in recent years have been largely offset by the creation of new vehicle as well as the development of existing SICAV, often through cross-border mergers of French funds," Emmanuel Chataignier continued. "We have therefore noticed an increase of around 10% in the number of sub-funds managed by French developers between 2013 and 2013 and this trends appears to be amplifying in 2015."
Finance is becoming digitised at warp speed. In France, the number of fintechs has exploded in recent years with a thousand companies teaching their digital splutions to the financial sector. The regulatory environment The regulatory environment is accentuating this groundswell with directives such as MiFID II, whose measures include prohibiting the instalment of retrocessions in independent advice and in portfolio management services.
PwC Luxembourg was of the opinion that the certain and sustainable growth of the market could see the segment grow by almost 70% by 2020.
"Developed by fintechs, these robots offer an algorithmic approach to the needs of investors with solutions recommendations," noted Grégory Weber, Director and Fintech leader at PwC Luxembourg. "These robotic financial advisory platforms offer optimal asset allocation according to the customer's sitaution, their aversion to risk, their financial objectives and appetite."
Grégory Weber concluded: "Today, managers have three approaches to this new segment: (1) they invest, (2) they associate with it or (3) they shape their own model."
Photo by PwC Luxembourg (Emmanuel Chataignier)
