Funds Europe – As investors in Asia increase allocations to alternatives, the global playing field is expected to ‘level out’ by 2025, according to a report by data provider Preqin. Will this have any impact on Luxembourg and its role as a cross-border funds destination? As private equity and broader alternative asset classes continue to grow, where will client demand be focused and how can the industry keep up?

Heinen – Looking at what’s happening in Asia right now, historically, most of the more locally oriented alternative funds were by default Cayman funds. Typically with little substance – although that has improved in the last year or so. So, you had situations where the administrator was in Hong Kong, the bank account in London, it was a Cayman fund and the directors just could be wherever. That is also changing in Asia, with a focus on onshoring.

There could be a huge market for places like Hong Kong, which has launched its own limited partnership regime, or Singapore, which is establishing itself as a fund hub with its own structures for private assets. Luxembourg will be very well placed to continue to benefit from this trend, especially whenever Asian managers raise capital in Europe or invest in Europe.

Smith – People have always said that Singapore was going to be the Luxembourg of Asia, but that is a huge simplification. There are three different Asian passports on the go at the moment, none of which have taken off.

When you’re talking about Asia and the appetite for alternatives, it’s the same as it was for mutual funds − the appetite is less for investing and more for speculation, which makes it very difficult for the managers to enter those markets, because they don’t have stability and predictability of revenue. So, it’s a dangerous market, there’s risk involved in going into Asia for an alternatives manager and the local managers, who may have some very good techniques and some very good products, are inexperienced in how to raise assets.

I think it’s a very vibrant region and that the future is Asia, in comparison with Europe and its ageing population problems. But it’s still very early days to try to make a business proposition in Asia for the alternative investment space in the same way that you can in Europe.

Brimeyer – There is another trend that we see. Whereas in the past, the funds were more geographically limited − a European fund, an Asian fund or a US fund − nowadays the bigger fund managers launch global investment platforms where their new-generation fund is composed of three, four, five or even more fund vehicles that are fine-tuned to the specific needs of different categories of investors, with vehicles based in Asia, in Europe and in the US.

Returning to the topic of the positioning of Luxembourg, historically we’ve had strong international connections and have been swift on cross-border activity. I think it will continue to be an asset for Luxembourg funds where the Luxembourg vehicle will be prominent in the global set-up of fund structures. And if we continue to build a strong cluster of service providers, as we are doing, we have a very strong value proposition for being the engine that will be driving an interesting part of the global private assets industry from Luxembourg.

Mas – The Asian market is very fragmented; it’s not unified as it would be in the EU, so that is a challenge in itself, but there is an appetite.

I think we are seeing Luxembourg in the picture more and more, and I think that’s because the professional association and the branding of Luxembourg has been strong and is paying off.

Nowadays, bigger fund managers tend to have platforms attracting investors in different parts of the world, whether through feeders or parallel funds, and I think fund administrators can look after these platforms in the different jurisdictions.

Godfrey – Asia is definitely the future in terms of growth, but when will it come and will it be competition for Luxembourg? I don’t think so.

Fessey – I don’t think geography particularly plays a part in where you choose to put your funds. It’s more a function of where you feel comfortable that the legislative regime and the ecosystem is suitable to give you the right service, and give you the right framework in which you can achieve your aim.