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Lipper Fitzrovia’s latest analysis of the Luxembourg funds industry shows the third year of double digit growth in total net assets (both Euro and US$) for all domiciled collective investment funds, rising by 20% to US$1,797.2 billion (€ 1,527.6 billion) at year end 2005, up from US$1,500.3 billion (€ 1,103.8 billion) in 2004.

The 12th annual Luxembourg Fund Encyclopaedia highlights that the total number of funds and subfunds rose from 7,777 to 8,434. The number of equity funds increased to 2,997 from 2,909 – reversing the trend of the previous two years when numbers declined. Assets invested in equity funds rose for the third year running, increasing 36% to US$ 683.2 billion.

There was a small increase in fund numbers across the other main asset classes, along with a similar growth in assets, apart from cash funds which experienced a slight reduction in assets. Alternative investment funds (primarily hedge funds) continue to thrive with assets of US$ 27.8 billion, up from US$18.7 billion last year (excluding funds of hedge funds).

221 global funds of funds were launched in 2005, making these the most popular type of fund to be launched - as per the previous two years. They also attracted the largest share of investment into newly-launched funds, taking US$ 23.1 billion over the year.

Turning to the service providers, JPMorgan maintains its position as the largest administrator by total net assets (US$ 211.8 billion), ahead of UBS (US$ 154.9 billion). Likewise for custody services, JPMorgan retains first place with US$ 257.0 billion, with UBS in second place (US$ 154.9 billion).

Among the legal advisers, Arendt & Medernach takes top place from Elvinger Hoss & Prussen, advising 2,003 funds and 1,957 funds respectively. However, Elvinger Hoss & Prussen has maintained its leading market share by total net assets. PricewaterhouseCoopers sustains its dominance in auditing 3,631 funds, twice as much as its nearest rival.

Claude Kremer, Partner at law firm Arendt & Medernach, comments: “We are proud that for the first time ever, our firm ranks number one Luxembourg legal advisor in terms of number of funds. We shall endeavour to further grow with our clients, providing them with innovative solutions to their challenging projects.”

Jacques Elvinger, Partner at law firm Elvinger Hoss & Prussen, comments: “The Fitzrovia survey is yet another illustration of the impressive growth of the Luxembourg fund industry during 2005. We believe that it demonstrates both the efficient manner in which UCITS III challenges were dealt with at regulatory and industry levels and the growing importance of Luxembourg as a centre for alternative investments. Our firm is pleased to have maintained its leading market share by total net assets and is determined to capitalise on its strengths to service clients efficiently in a growth environment.”

Susan Ebenston, SVP at JPMorgan Worldwide Securities Services, comments: “The Luxembourg fund industry experienced another year of strong growth driven by the implementation of UCITS III and an increase in global demand, as revealed in Lipper Fitzrovia's Luxembourg survey. As a 32-year veteran in the Luxembourg market, we are pleased to be ranked top fund administrator and custodian by Fitzrovia, as well as the first to reach $200 billion under administration and the first with over $250 billion under custody. JPMorgan's top position reflects successful business partnerships with many of the world's leading fund managers as they have innovated and extended their product and reach. Having created this market-leading operating model, we have been able to attract new clients who are able to benefit from our expertise. We continue to work hard to enable our clients' success - this leads to our success too.”

Thierry Blondeau, Investment Management leader at PwC Luxembourg, comments: “As shown by the Lipper Fitzrovia Encyclopaedia, 2005 has been an excellent year for the Luxembourg fund industry. More than 50% of the growth is due to net inflows rather than market performance and Luxembourg counts for a significant portion of the net sales in Europe. The reach of Luxembourg funds is becoming more global with new registrations for sale in countries such as Korea, Peru, Bulgaria and the Baltic States. 2006 will be another demanding year for the industry as some UCITS 3 related issues remain. Furthermore, some players still have to adapt their structure either to the profession related part of UCITS 3 or to both the profession and product related parts. In addition, tax reporting remains an issue and preparatory work for MiFID will have to commence. Basel II implications for custodian banks still have to be addressed as some aspects have not yet been considered. Last but not least, new opportunities in connection with the SICARs, Pension Fund Pooling and passporting of closed ended funds through the prospectus directive are receiving increasing interest.”

Lipper, a wholly owned subsidiary of Reuters, is a global leader in supplying fund information, analytical tools and commentary to fund companies, financial intermediaries and media organizations. It tracks over 135,000 funds worldwide through its offices in Europe, Asia and United States. The "Luxembourg Fund Encyclopaedia" is published annually by Fitzrovia (now Lipper Fitzrovia), which was acquired by Lipper in 2004. Lipper Fitzrovia is the leading provider of fee and expense data and related benchmarking services across Europe, Asia and ‘Offshore’ markets. Lipper Fitzrovia also continues to produce equivalent annual market share analyses for Ireland, Jersey and Guernsey.