Prateek Shukla
Master of Finance Class of 2019
Prateek is a Master of Finance Student at Frankfurt School....
Master of Finance

Luxembourg: A competitive market with new opportunities

November 13, 2018
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As an international student, we contemplate on opportunities to apply within the German job market. Yet, if we take the chance to peak out of this ecosystem, we find new alternative markets which are consistently winning the demands of various multinational companies. Among them Luxembourg shows the strongest promise.

Growing at 7.4% y-o-y in asset under management with $ 170bn invested in Digital Technology and Cybersecurity, incubating new ideas at the Luxembourg house of finance and technology, inviting funds from across the globe to leverage the cross-border investments through the ease of UCITS and AIFMD regulation and the EU passporting rights post-Brexit, Luxembourg sure knows the demands of the market and sells itself with the right elevator pitch.

US funds have now captured 20% of the Luxembourg fund market with many attracted by the alternative investment space and the ease with which Luxembourg installs the AIFMD regulation, helping these funds to establish fast and hit the ground running.  Chinese and German funds are not far behind and hold close to 18% of Luxembourg fund market. Looking at the big picture, as a future finance professional, we have to appreciate the growth of Luxembourg as a lucrative fund market.

Many of the top Private Equity structures are now domiciled in Luxembourg with a recent PwC study predicting the growth of the private market at 10% by 2021. Traditional Investment funds – Equities and Fixed Income – have seen lesser growth than Alternative Investments funds with investors preferring commodities over equities for their low correlation with market sentiments.

Key growth areas were Private Equity, Venture Capital and Real estate adding $160 bn over 2016 in net assets. Few of the drivers behind this growth were (1) Ease of doing business (2) Smooth taxation process (3) technology driven user base. Top Asset Managers and Investment banks have now huge spaces in Luxembourg and are tailoring their strategies and product line to bespoke client needs across the Luxembourg market and beyond. Luxembourg is a major front-runner when it comes to cross-border investments. The location is so powerful that the ease with which these banks do business across the European Union speaks volumes for the hard work the Luxembourg government is doing behind the scenes.

International students can now aim at Luxembourg as a prime destination to work after completing their master’s, as well as considering that the market is still growing and has multiple opportunities for those who fit the bill. Most importantly, the internationalization of the market attracts those with the ability to work in competitive, diverse environments.

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