Investors stayed in Luxembourg funds despite pandemic, group head says

(Corrects billion to trillion in first and sixth paragraph)

Luxembourg's multi-trillion-euro investment funds sector has bounced back from its spring coronavirus slump thanks to governments and central banks moving to support global financial markets, the head of the industry's trade group said.

This spring's pandemic-induced decline in asset values cut the Luxembourg industry's size, but less than 3% of the drop was the result of investors cashing out their fund holdings, said Corinne Lamesch, president of the Luxembourg Association of Investment Funds  (ALFI).

"The good news is that this fall has been driven more by falling markets and not by massive investor buyouts," she said in an interview with the Luxemburger Wort newspaper. "There were no massive buybacks and confidence in the financial sector remained intact."

Government spending along with central bank measures "has helped calm the markets, with some investors even taking the opportunity to invest their cash in investment funds," Lamesch said. 

Luxembourg is the world's second largest fund management centre after the US.

Luxembourg's funds were managing assets worth a record of nearly €4.8 trillion in January, but that fell to €4.15 trillion in March as the virus that causes the Covid-19 disease spread worldwide, Lamesch said. That has since rebounded to €4.6 trillion euros at the end of July, she said.

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