After a slight decline, the total amount of assets under management in investment funds in Luxembourg – which includes UCIs subject to the 2010 law, specialized investment funds and Sicar – recorded a relative record in November . According to the latest figures published by the Financial Sector Supervisory Commission (CSSF), the sector’s net assets thus reached 5 749 billion euros on November 30, 2021. This represents an increase of 0.55% compared to the previous month .

While the sector’s total assets fell by 0.81% at the end of the second quarter of 2021, the CSSF nonetheless notes that the Luxembourg UCI industry has grown by 17.77% over the previous twelve months. The year 2020 ended with an annual increase of 5.40%.

Impacted by the various developments in the health crisis, the OPC industry is now suffering the effects of global health developments and higher inflation than expected in Europe and the United States. Both weighed on investor sentiment, leading to a drop in the stock market during November 2021 to the benefit of the mandatory market.

Shadow of the Omicron variant and inflation

In contrast to Luxembourg, the European UCI market recorded a negative performance of 1.35%, again in a context of health crisis. The increase in hospitalizations and the appearance of new restrictions caused by the emergence of the fourth wave of Covid in several countries have thus influenced a negative trend in the European UCI market. The CSSF specifies that this situation is also due to higher inflation in the euro zone and persistent shortages in supply chains.

Emerging countries also recorded a negative trend in November. It is especially on the side of Eastern Europe where the fall was done most with a negative variation of 7.% of the market of the actions. It should be noted that the region has been strongly influenced by the fall in the price of oil and the resurgence of Covid cases in Czechia, Poland and Hungary.

Amid doubts about the Omicron variant, the Asian equity market fell 0.96% between October and November. The CSSF recalls that this trend is also part of the context of a fall in the Chinese equity market for fear of new health restrictions, a slowdown in the real estate market and regulatory strengthening of internet surveillance.

A positive American market

The US investment fund market is doing relatively better than the overall average, reaching November with a positive variation of 1.30%. Despite a pullback in US equities attracted by concerns over the Omicron variant and the faster reduction in asset purchases by the Federal Reserve (Fed) due to inflation, US mutual funds still managed to derive their benefit. “The sharp rise of the US dollar against the euro has pushed the category of US UCIs into positive territory,” notes the CSSF.

The surprise is real on the American side in a context where the president of the Fed, Jerome Powell, had himself indicated, in the summer of 2021, that the policy of massive support to the economy was coming to an end. The latter estimated that the decrease in unemployment and the evolution of the pandemic made it possible to reduce the repurchases of assets by the Fed “before the end of the year”.