Luxembourg, European domicile for responsible investment funds

18 Mai 2017
Charles Muller, head of Responsible Investing, KPMG Luxembourg.
Charles Muller, head of Responsible Investing, KPMG Luxembourg.
(Photo: Olivier Minaire / archives)

The European responsible investing fund market has almost doubled in size since 2010, reaching EUR 476 billion of Assets under Management (AuM) managed by 2,413 funds at the end of 2016 as the new KPMG Luxembourg/Broadridge statistics on the European responsible investing fund market commissioned by Alfi and LuxFlag reveal. Assets under management encountered a growth of 26.6% from 2014 to 2016, a substantial development across all ESG-cross sectoral and thematic (Environmental, Social) categories.

Luxembourg, Europe’s leading investment fund centre, has strengthened its position as number one domicile for responsible investing funds in Europe in general and in each of the underlying strategies, accounting now for 31% of funds and 35% of total Assets under Management. ESG cross-sectoral funds applying positive and negative screening strategies remain the largest market share with 1,687 funds and EUR 423.3 billion Assets under Management.

‘Large institutional investors have started to publicly announce their divestments from coal, whilst asset managers are decarbonizing their portfolios and launching more climate funds. Unsurprisingly, our statistics on the European Responsible Investing fund market, reflect this increasing trend.’ explains Charles Muller, head of Responsible Investing, KPMG Luxembourg.

The market has seen a clear boost in Climate Finance. Post-COP21, renewable energy and climate change funds increased their share to 36% in the Environment category, encountering a significant growth in the number of funds (42%) and AuM (47%) since 2014. The Luxembourg domicile again occupies the leading position in this category and accounts for 38% of funds and 45% of Assets under Management.

Responsible investing is increasingly driven by the spreading recognition that ESG factors play a material role in determining risk and return, as well as shaping the industry. Next to the established specialized investment managers, more and more mainstream asset managers are entering the market, seizing the opportunity of this flourishing sector. Increasing thoroughness and granularity of responsible investing strategies, processes and policies enhance market sophistication and drive total growth.

‘Our analysis of the European responsible investing fund market shows that in Luxembourg, the annualized growth rate of the responsible investment fund sector over the past two years has exceeded the already very positive growth rate of the Luxembourg fund industry as a whole. The figures demonstrate not only raising investors’ awareness of responsible investing, but also Luxembourg’s solid position in this market compared to other EU domiciles.’ comments Anouk Agnes, Deputy Director General, Alfi.

‘As the RI market continues to develop in size and maturity, transparency, accuracy and trust remain critical requirements to progress and innovate. This trend goes along with a steady advancement of non-financial reporting and increasing demand for third-party assessments to prove sustainability commitments. Accordingly, LuxFlag labels, which increase transparency and foster confidence, have encountered a 30% growth rate in the last two years, gaining further traction among sustainability-oriented investors and asset managers in their pursuit of long-term success.’ concludes Annemarie Arens, General Manager of LuxFlag.

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