Europe: net assets of domiciled funds 2023

At the end of the financial year in 2023, Luxembourg was home to the highest level of net assets in Europe, totaling over five trillion euros. Ireland followed in second place, holding almost four trillion euros in combined assets from both Alternative Investment Funds (AIFs) and Undertakings for Collective Investment in Transferable Securities Directive (UCITS). Almost half of all UCITS and AIFs net assets in Europe were domiciled in Luxembourg and Ireland. Bulgaria, Croatia, and Slovenia were home to some of the lowest levels of assets, as Bulgaria held roughly 1.3 billion euros in combined AIF and UCITS assets.

What are UCITS?

UCITS operate under the regulatory framework of the European commissions and are similar to mutual funds. Following the unified regulatory and investor protection requirements, UCITS funds can be registered (domiciled) and sold in any EU member state. One of the primary benefits of UCITS is the ability of fund promoters to create a single financial product that can be traded across the EU. This removes the need to create multiple fund securities on a jurisdictional basis. Similarly, to a mutual fund, the net sales of UCITS are affected by various asset classes due to the diversified holdings of the security.

What are AIFs?

AIFs are a collective investment vehicle, aimed toward professional investors. In the EU, financial regulation was placed upon AIFs, which covered products such as hedge funds, real estate funds, and other institutional funds. This framework intended to increase single-market efficiency, and reduce risk. Unlike UCITS, AIFs domiciled in European member countries can be marketed at a national level by non-EU asset managers. While funds of non-EU managers cannot access the entire single EU market, they may play a competitive role at a national level once permission has been granted by EU members.