Institutionals Luxembourg: Europe’s no. 1 fund location
05.07.2023 • 5 Reading Time
Luxembourg: Europe’s most important financial hub
In recent decades, Luxembourg has developed into one of the most important financial centres in the world. Thanks to advanced concepts and strict regulation, financial players from all over the world are attracted to the small European city state. But despite its small footprint, its potential has not yet been exhausted – on the contrary.
A small country with great importance
Luxembourg may be small in terms of area and population, but it holds a hugely important position on the international financial market. After Malta, the second smallest member state of the European Union, it is also the wealthiest – measured by per capita gross domestic product.
Luxembourg owes its economic position primarily to its status as a significant financial centre and fund location. With more than 6.1 trillion euros in assets under management (December 2022), it is the second largest fund location in the world after the US.
Luxembourg owes its economic position primarily to its status as a significant financial centre and fund location. With more than 6.1 trillion euros in assets under management (December 2022), it is the second largest fund location in the world after the US.
Fund management included
Commerz Real is also represented locally in Luxembourg – at one of the most important office locations, the Kirchberg Plateau. It is home to important European institutions such as the European Court of Justice (ECJ) and the European Court of Auditors (ECA). The European Parliament (EP) is also based in Luxembourg.
Commerz Real Fund Management (CRFM), a subsidiary of Commerz Real, is based here in the “Président” office complex. The complex is part of the portfolio of hausInvest, Commerz Real’s open-ended retail real estate fund. The employees take care of the local management of the investment fund launched in Luxembourg:
The investment funds focus on sustainable tangible assets from the real estate and renewable energies sectors. Both klimaVest and the Institutional Renewable Energies Fund II are classified as impact funds and meet the transparency requirements in accordance with Article 9 of the EU Disclosure Regulation. In this way, both funds are committed to pursuing specific sustainability goals, making them measurable and communicating them transparently.
Commerz Real Fund Management (CRFM), a subsidiary of Commerz Real, is based here in the “Président” office complex. The complex is part of the portfolio of hausInvest, Commerz Real’s open-ended retail real estate fund. The employees take care of the local management of the investment fund launched in Luxembourg:
- klimaVest
- Institutional Infrastructure Multi-Asset Fund II SCA SICAV-RAIF (CRIIMAF II)
- European Hotel Fund (CRIEHF)
- Institutional Renewable Energies Fund II (CRIREF II)
The investment funds focus on sustainable tangible assets from the real estate and renewable energies sectors. Both klimaVest and the Institutional Renewable Energies Fund II are classified as impact funds and meet the transparency requirements in accordance with Article 9 of the EU Disclosure Regulation. In this way, both funds are committed to pursuing specific sustainability goals, making them measurable and communicating them transparently.
Thanks primarily to smart regulations and highly efficient management, Luxembourg has emerged as an important financial hub and the second largest fund location in the world, attracting fund initiators and investors from all over the globe. Luxembourg will also gain in importance as a fund location for Commerz Real. However, regulatory arbitrage in Luxembourg style does not mean the path of least resistance: the standards are strict and the CSSF’s supervisory network is closely meshed.
Driving force in the heart of Europe
The choice of Luxembourg as the fund location is no coincidence. The favourable regulatory framework conditions, such as the RAIF and SICAV fund structures or the European fund vehicle ELTIF, are very attractive for wealth management companies. The Luxembourg financial supervisory authority, the Commission de Surveillance du Secteur Financier (CSSF), is also known for its clear and swift communication and in-depth understanding of the fund industry. Strict standards and careful market surveillance are also trademarks of the CSSF and ensure that the financial products launched always comply with regulations.
Furthermore, Luxembourg has an impressive cultural diversity. Dirk Holz, Managing Director of CRFM, emphasises the unique nature of the country, which 170 nationalities call home. The diversity, the central position in Europe, its role as a founding member of the EU and political and financial stability make Luxembourg an attractive meeting place – not only for work, but also for life.
Thanks to these characteristics, Luxembourg offers excellent conditions to develop new ideas, concepts and products that can face the challenges of the future in a competitive, well-regulated and yet progressive environment. Thanks to the ELTIF (European Long-Term Fund) vehicle, for example, Commerz Real is now also providing retail investors with access to a new, high-opportunity asset class: renewable energy. This will ensure that more private capital can flow into the energy industry and make a significant contribution to financing a sustainable energy transition.
Furthermore, Luxembourg has an impressive cultural diversity. Dirk Holz, Managing Director of CRFM, emphasises the unique nature of the country, which 170 nationalities call home. The diversity, the central position in Europe, its role as a founding member of the EU and political and financial stability make Luxembourg an attractive meeting place – not only for work, but also for life.
Thanks to these characteristics, Luxembourg offers excellent conditions to develop new ideas, concepts and products that can face the challenges of the future in a competitive, well-regulated and yet progressive environment. Thanks to the ELTIF (European Long-Term Fund) vehicle, for example, Commerz Real is now also providing retail investors with access to a new, high-opportunity asset class: renewable energy. This will ensure that more private capital can flow into the energy industry and make a significant contribution to financing a sustainable energy transition.