Emerging Financial Trends

As a leading centre for investment funds, Luxembourg is moving quickly to respond to recent trends and regulatory changes. As the fundraising market has tightened, Luxembourg has proposed more sophisticated services and clarified rules on cross-border activities, allowing initiators to test the market before launching a fund.

But this isn’t the only trend that Krancenblum and Senanayake have their eye on. “Rising inflation and official interest rates have helped to bring private debt into the mainstream of investment classes,” Krancenblum says, “as investors seek to avoid the turbulence of public markets.” This asset class has grown steadily since 2018 and is expected to reach an all-time high of $2.3 trillion in 2027.

Hybrid funds, too, are becoming more common, providing greater flexibility and returns. “Managers need administrators to provide knowledgeable and thorough guidance when setting up a fund,” Senanayake says. “And with the rise of private debt and hybrid funds, structures are becoming more complicated and clients are expecting much more from their administrators, in terms of both expertise and technology.”

ELTIF 2.0 was also flagged as a game changer in the private markets, providing access to private wealth investors searching for yield through a regulated vehicle tailor-made for long-term, illiquid and real assets. “ELTIFs can represent a safer pathway for investors interested in private equity investments but present a lower risk profile than pure private equity funds. Platforms such as Moonfare and iCapital are playing a fundamental role in the democratisation of the private markets,” comments Senanayake.