Market Trends of Europe ETF Industry
Equity Funds occupied the Major percentage in ETF Market
The European ETF industry enjoyed inflows throughout December 2022. These inflows occurred in a volatile market environment. The market sentiment is driven by concerns about high inflation rates, increasing interest rates, the late effects of the market turmoil in UK government bonds, geopolitical tensions, and disrupted delivery chains caused by the COVID-19 pandemic. In conjunction with the estimated net inflows, the underlying markets' performance led to decreasing assets under management. As for the overall structure of the European ETF industry, it was not surprising that equity funds held the majority of assets, followed by bond funds.
Luxembourg is the largest share for Net assets of open-ended mutual funds in Europe
Luxembourg offers a well-established and investor-friendly regulatory environment, providing a high level of investor protection and regulatory oversight. Luxembourg is known for its expertise in facilitating cross-border distribution of funds. Fund managers often choose Luxembourg-domiciled funds to reach investors across multiple European countries. Luxembourg funds are not only popular in Europe but are also distributed globally. The country’s international reputation and the recognition of its regulatory framework contribute to the global appeal of Luxembourg-domiciled funds.
Luxembourg’s tax regime is considered favourable for fund structures. The absence of withholding tax on dividends and interest payments attracts fund managers and investors seeking tax-efficient investment solutions. Luxembourg has developed a robust fund administration ecosystem, with a wealth of service providers offering fund administration, custody, and other related services. Luxembourg hosts a wide range of open-ended mutual funds, including equity funds, bond funds, money market funds, and alternative investment funds, providing investors with diverse options. Luxembourg is a well-established global financial center, attracting financial institutions, asset managers, and investment firms. This infrastructure supports the growth and development of the fund industry.
