Luxembourg’s asset management industry is strong in two dimensions:
The research programme Asset Management deals with asset pricing, alternative investments, and the funds industry. We put a particular focus on alternative investments such as private equity, hedge funds, real estate, and art (and other collectibles).
Our alternative investment research questions focus on liquidity (in real estate and private equity), personal tastes (for art), or asymmetric information (for hedge funds and private equity). Due to increasingly stringent regulation of the banking sector, large amounts of wealth are now managed by hedge funds, while private equity is an important driver for the financing of young and innovative firms and of particular importance for a knowledge-based economy such as Luxembourg’s. Based on the Department of Finance’s expertise in empirical research and data analysis, a unique dataset for investment funds registered in Luxembourg is being created in close cooperation with the Luxembourg Association for Investment Funds (ALFI).
Our research in asset management also covers household finance and wealth management of (rich) individuals. We investigate the financial decisions of households including payments, investments, portfolio choices, borrowing and credit. Behavioural finance incorporates findings from psychology to explain individuals’ financial decision making and the related macro market outcomes. Combined with experimental methods, it offers insights into the behavioural patterns of private investors. Luxembourg has been notably successful in attracting an affluent client base; consequently, the area of wealth management has been of central importance for the industry.