Ireland gains on Luxembourg’s lead in EU investment industry

Luxembourg is Europe’s largest holder of investment fund assets with 26.5% of the total, a 4.7% drop since 2010 and a big blow considering its Irish rival upped its share of the industry in 2011.

Luxembourg’s loss is Ireland’s gain in the European investment industry with Ireland boosting its market share in 2011. Ireland saw investment fund assets surge 9.6% and now represents 13% of the total market, Efama data shows.

Total net sales of Ucits domiciled in Ireland alone recorded €62bn in 2011.

Ireland increased its market share despite heavy redemptions throughout the investment fund industry. Overall, investment fund assets in Europe fell 2.8% in 2011 to €7.9trn.

With the exception of Ireland, the PIIGS witnessed the heaviest loss of market share with Greece’s tumbling 30.9% to 0.1% of the total, Portugal’s dropping 14.1% to 0.3% of the total, Italy’s falling 9.2% to 2.4% and Spain’s declining 8.3% to 2% of the total.

Other jurisdictions to have lost out last year include France, which saw its market share reduced by 8.1% to 17.4% of the total, Belgium, whose net assets dropped 12.5% to 1.1% of the total, and Finland, whose assets dropped 9.9% to represent just 0.7% of the market.

Europe’s investment fund industry includes Ucits funds, money market funds and non-Ucits funds (German Spezialfonds, British investment trusts, French employees savings and real estate funds among others).

Outflows from Ucits funds accounted for a sizeable chunk of the industry’s assets decline. Net assets of Ucits fell 6.2% to €5.63trn after registering net outflows of €88bn during the year.

Long-term Ucits saw the biggest drop in popularity with investors, seeing net outflows of €55bn in 2011, against net inflows of €290bn in 2010. This reversal started in August when the downgrading of the US government debt and the euro crisis unravelled financial markets, leading to strong withdrawals from equity, bond and balanced funds, Efama noted.

Money market funds likewise contributed to the industry’s difficult year, representing €33bn of outflows.

Non-Ucits however helped stem the outflows, increasing by 6.8% to €2.27trn, on the back of continued strong net inflows into special funds (€101bn). Efama attributed these inflows to insurance companies, pension funds and other institutional investors using these vehicles to invest recurrent contributions collected from their members.

Nonetheless these inflows into special funds were weaker than in 2010 when they received €145bn.

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