PwC Luxembourg has announced the publication of its 2022 Observatory for Management Companies (ManCos), a report that pursues an in-depth analysis of the world of management companies and connects the dots to provide an overall view of where the industry is to help people understand the latest figures and trends and to act as a guide and a partner in clients' business plans for the future.
According to the Observatory for ManCos, the development of alternative funds in Luxembourg accentuates a challenge which is not new for ManCos in the country: the availability of talent. Employees in ManCos reached 6,581 in 2021, up 7% over one year, boosted by a 16% increase in alternative investment fund managers (AIFMs). This is combined with a continuous need for ManCos to maintain adequate substance.
Environmental, social and governance (ESG) being an important topic in the financial sector, ManCos have an important role to play to ensure compliance. However, due to some lack of clarity, they are facing challenges in relation to sustainable finance in their operation. The three main challenges in 2021 were: the risks associated with data (inaccuracy, non alignment or unavailability), the non-harmonised sustainable finance framework and the impact of the costs associated with data research, collection and reporting.
Another challenge at the top of the agenda for ManCos remained their digital transformation, aiming at increasing the efficiency of their operations and providing better and qualitative information to their clients. In 2021, 40% of ManCos intended to significantly increase (at least by 10%) their long-term investments in this area. ManCos aimed at benefiting from data management, data exchange and ultimately at providing accurate and a real time basis information to investors, brought via technologies.
The number of ManCos in Luxembourg decreased by nine entities to 305 in 2021.
Pierre-Marie Bochereau, Director and Management Company Coordinator at PwC Luxembourg, commented: "2021 marked another successful year for ManCos. While the challenges are numerous and the sector is evolving quickly, the ManCos have demonstrated an incredible ability to adapt by developing their business models and transforming regulatory evolution into business opportunities. 2021 ended again with a series of records. ManCos were managing €5,314 billion, which marks an increase of 22% year-over-year (YOY ). Both traditional (UCITS) and alternative assets (regulated and unregulated assets) reported double digit increases, 16% for UCITS but even more impressive for AIFs with 41% YOY!"
Bertrand Jaboulay, Partner and Management Company Leader at PwC Luxembourg, added: “ManCos in Luxembourg are here to stay, thanks to the country being an attractive fund hub, having a sound ecosystem (proximity with stakeholders and regulators, political stability, a good business environment, etc.) and taking on the role as a robust governance centre and a first mover for substance requirements in Luxembourg".
The seventh edition of the Management Company Observatory Barometer is now available on the PwC Luxembourg website: https://www.pwc.lu/en/asset-management/management-company.html
