With an annual GDP of approximately $57 bn Luxembourg has a larger economy than most of the other fund domiciles. And it has one of the highest GDP per capita’s in the world, at over a $100,000 per head. This is over double the GDP per head of its neighbours Belgium or Holland.
The cross border European asset management industry has become the main driving force of the Luxembourg economy. The financial sector accounts for about a third of Luxembourg’s GDP. A proportion of the people that work in the Grand Duchy’s financial sector, however, do not live in Luxembourg. This domicile is unique in that significant numbers of people cross the border every day to work in financial services (and other areas of the economy). They come from Belgium, France and Germany. By comparison with other fund jurisdictions salaries in Luxembourg are high, as are its fixed costs.
Assets of Luxembourg domiciled funds have reached $3.3 trillion which makes this tiny country the second largest fund jurisdiction in the world (after the US). Luxembourg is by far the biggest centre for UCITS funds which are now distributed all over the world, as well as across Europe. Many in the jurisdiction hope that AIFMD will follow a similar path in its development to UCITS and that Luxembourg will therefore become as dominant on the alternative side of the European asset management industry as it is on the mainstream side.
Population (approx): 518,000