Alfi is a non-profit association which represents the Luxembourg investment fund community. Who cares, one may think. A national association of a small country. But: Luxembourg’s fund industry ranks second worldwide (after the US) and it’s number 1 in Europe!
Created in 1988, the Association today represents over 1,500 Luxembourg domiciled investment funds, asset management companies, and a wide range of related service providers. We had the opportunity to ask Denise Voss, Alfi’s chairman, a few question.
How important is Luxembourg’s fund industry for Luxembourg’s economy? What share does it contribute to Luxembourg’s gross domestic product?
Investment funds count for 8% of Luxembourg’s gross domestic product. In 2018 subscription tax paid by Luxembourg investment funds was nearly one billion Euro, part of the 10 percent of the fiscal revenue the fund industry contributes to Luxembourg.
How has Luxembourg’s fund industry benefited from the Brexit so far?
Brexit creates an uncertainty which results in many of the UK based fund managers transferring their assets, and in many cases they moved them to Luxembourg. (Editor’s note: 80 new financial groups flocked to the country’s huge 4.3 trillion fund market in 2018)
In your recent interview in the Financial Times you still talk about a lose-lose situation for Luxembourg, why is that?
We have a longstanding partnership with the UK, they have been very good about free trade and financial services and they have been an important member of the EU. With the UK leaving, Luxembourg and the other small member states that play an important role on this market (mainly Ireland) lose a strong ally. Before, we were 3, now we are 2! The UK has a pro-business view and without them we could lose some of our influence on EU rule-making.
At the moment, 18 % of assets of the Luxembourg fund centre are managed by British asset managers. Brexit creates uncertainties but our general hope is that the distributors and their clients, investment fund investors, will continue to choose Luxembourg as their preferred location for investment funds.
What do you think is needed politically to keep Luxembourg’s business model successful?
We rely on the government and they have always been helpful by ensuring Luxembourg has a robust legal framework and a strong financial regulator. In addition, the finance minister often joins us on missions to promote Luxembourg and on our “roadshows”, how we call them. These are two reasons why Luxembourg is successful as an investment fund centre.
Apart from that Luxembourg has always been very pragmatic and emphasizing economic diversity. They are looking into new areas already, like space mining for example, FinTech and Bio Medical Technology and the good thing is, that many of these have strong links!
You are American, but you have been living here for 29 years, what do you think about the last almost 30 years and what big changes do you believe will the next 30 years bring for Lux?
Well, during that time the population has doubled, from over 300,000 when I arrived to more than 600,000 now, and a significant portion of that growth has been from foreigners, like myself. In terms of integration I think that Luxembourg has been pragmatic there again with introducing the possibility of double-nationality.
Also, I am always amazed when looking at all that Luxembourg has to offer now in terms of culture, all of the Art, Films, and Dance you can enjoy here. It´s just a pity that I don´t have a lot of time to enjoy them!
Alfi website
FT (subscription): Denise Voss, the American helping Luxembourg run it’s money
