As the second-largest fund market in the world after the USA, Luxembourg has earned itself a reputation for stability, a business-friendly environment and excellence in the provision of services to the investment management industry. The world’s leading asset managers have chosen Luxembourg as a centre for their international fund ranges, and Luxembourg regulated funds are now distributed in more than 80 countries throughout the world. Luxembourg had approximately EUR5.5 trillion in assets under management (AUM) in regulated funds as of 31 May 2024.

Since the first Undertakings for Collective Investment in Transferable Securities (UCITS) Directive in 1985, Luxembourg has been at the forefront of the implementation of European financial legislation, showing an ability to evolve and adapt quickly to changing requirements. There now exists a wide choice of vehicles, allowing managers to structure a fund (both alternative investment funds (AIFs) and retail funds) in Luxembourg that best suits their own needs as well as the needs of their investors.

The success of Luxembourg as a financial centre is testament to the strong regulatory and operational environment that Luxembourg has created. Its willingness to adapt to change will ensure that, over the coming years, the industry will continue to thrive.

In addition, to illustrate some recent trends, and given Luxembourg’s status as a leading private markets hub, it is well positioned for 2025 to capitalise on the new European long-term investment fund (ELTIF) 2.0 structure, regulated per ELTIF regulatory technical standards (RTS) as referenced in 4. Legal, Regulatory or Tax Changes, and the burgeoning worldwide trends of retailisation in private markets. Out of 132 ELTIFs as of September 2024, 84 are domiciled in Luxembourg, holding EUR7.7 billion in AUM (as of the end of 2023). Finally, the trend of more sustainable funds in Europe that are domiciled in Luxembourg keeps evolving. This trend towards more sustainable investing is expected to continue during 2025, as the AUM of asset managers with sustainable funds domiciled in Luxembourg jumped 12.3% from 2022 to the end of June 2024.