Luxembourg long ago became the financial center of the European Union. A place within the community space that offers low taxation and all the facilities in the world to establish companies and investment vehicles. And without the tax haven label. The inertia of investors for the management of funds from that country has accelerated and 2021 has started firing its growth. Between January and March, latest data published by the National Securities Market Commission (CNMV), 17,744 million euros have been captured by funds and sicav with headquarters in the Central European duchy. Almost 200 million a day left Spain for Luxembourg.
163 Spanish bankers earned more than one million euros a year in the financial year before the pandemic
This is shown in the sum of the assets raised in Spain by funds and sicavs based in Luxembourg recently published by the stock market supervisor. 176,877 million euros of Spanish investors are in these vehicles. It represents a significant growth of more than 11% in just three months. The difference is even wider if the data from the first quarter are compared with those from the same period last year, when the effects of the pandemic began to be appreciated. At the time, the figure was just under € 128 billion. It represents an increase in one year of 38%.
The difference becomes even more significant when compared to data from five years earlier. In just five years, the money from Luxembourg funds and sicavs raised in Spain has doubled, according to CNMV records. In March 2016, this patrimony was around 83,000 million.
Fundamentally, the money that is in Luxembourg from Spanish investors is in sicav. These controversial collective investment companies, which have extensive tax advantages, have been in public and political debate for three years and the need for greater control and restriction of their use has been repeatedly expressed. For example, the new law against tax fraud included higher capital requirements for the shareholders of these companies to be able to opt for the 1% tax that corresponds to these vehicles. This situation has meant that for at least three years the number of Sicavs in Spain has been reducing and Spanish money is increasing in Luxembourg by investors who seek to maintain their advantageous conditions.
On the one hand, there are the Spanish banks themselves, which, in their expansion of the business of managing their clients’ savings, have encouraged investment in their Sicavs in Luxembourg within their private banking divisions (large assets). On the other hand, the growth of global fund management giants such as Blackrock, with a strong presence in the duchy, has been attracting more and more money from Spanish investors. The statistics of the supervisor take into account foreign companies that are marketed in Spain.
According to data from the CNMV, the funds and sicavs based in Luxembourg manage the money of 3.75 million Spanish investors. It must be remembered that this does not mean that this is the number of Spaniards who have their investments managed from the Central European country. There may be customers who have more than one participation, so the number of people would be less. In any case, there has been a gain of 373,000 participants in these companies at the beginning of the year. It is an increase of more than 1,100,000 in just one year.
There are 460 funds and Sicavs based in Luxembourg that are marketed in Spain, a figure that has not stopped growing and that accounts for almost half of the slightly more than 1,000 foreign investment vehicles offered in our country. There is one Sicav that stands out from the rest and is managed by Blackrock, the world’s largest investor and, among other things, the largest shareholder in the Ibex 35. It is Blackrock Global Funds (BGF).
At the end of March, GDB managed 12,366 million Spanish investors from Luxembourg. It has had a growth of more than 2,000 million in just three months and has shot up from the 8,600 million it managed when the economic crisis caused by the pandemic began. It has gone from managing the money of 143,000 Spanish participants in March 2020 to 216,000 in the same month this year, showing its progress. The largest manager in the world not only attracts money from Spanish investors from that company. According to the CNMV registry, there are eight companies that between Luxembourg and Ireland have more than 16,000 million euros in assets raised in Spain.
The management of long-term savings for clients has become a strategic business for banks in Spain. This activity has gained weight in the income of the entities, which are directing their clients commercially as far as possible towards savings products such as the management of investment funds. In addition to their own management companies, banks offer third-party products. For example, the aforementioned GDB appears in the CNMV as a sicav marketed in Spain practically throughout the sector.
The list of the largest funds includes the main management companies in the world. The second largest sicav for Spanish assets managed from abroad is led by Pictet, with 9.4 billion euros. It is followed by Morgan Stanley, with a sicav with 9,300 million of equity raised in Spain. Robeco has the fourth largest sicav with Spanish money, 8.6 billion. Fidelity, with a Sicav of 7,150 million, ranks fifth, although it is the most important by number of Spanish participants, with 241,000.
Almost 220,000 million
In total, Spanish investors have 219,000 million euros managed from abroad. This volume is growing considerably and in the first three months of the year an increase of more than 10% was noted compared to the end of 2020. The difference is even more notable compared to the month of March 2020, which marks the beginning of the pandemic and crisis: the rise is 30%, according to the CNMV records. Five years ago this wealth abroad was less than half, 107,000 million.
Therefore, Luxembourg monopolizes 80% of the money that investors have abroad in funds and companies that are marketed in Spain. Another prominent country is Ireland, where 26,000 million euros of assets of 723,000 Spanish shareholders are managed. In France, with management companies such as Carmignac, Amundi or Lazard, there are almost 10.8 billion Spanish investors. Germany, the United Kingdom or the Netherlands are the other destinations of this heritage.
The boom in investment funds does not only affect those management companies based abroad. Domestic funds reached in June, according to data from the employer Inverco, for the first time 300,000 million euros, almost 10% more so far this year and an increase of more than 15% compared to the same date the previous year. It is a business that has doubled in a decade.