For years, owning an in-house management company (“ManCo”) was seen as a mark of strength for global asset managers.
It signalled control, credibility, and commitment to a fund's home market. Today, that assumption is being tested.
In a recent webinar, Renaud Oury, our Regional Head in Luxembourg, moderated a discussion featuring Martin Jufer, Global Chief Operating Officer and CEO Switzerland at GAM; Frank Lichtenthaeler, Partner, Advisory & Consulting at Deloitte Luxembourg; and Frank de Boer, Board Member and Head of Strategic Development ManCo at FundRock.
The panel explored how regulatory requirements, operating model considerations, and investor expectations are influencing how asset managers approach the ManCo model in Luxembourg.
From cost question to strategic question
Regulatory pressure has increased steadily across global asset management. Margins are tighter, and the capital and reputational risk attached to running a ManCo have grown. For some firms, this has made third-party ManCos an appealing way to manage costs.
However, cost is only part of the picture. With ongoing concentration in the industry, scalability, access to tech and know-how are equally strong drivers: global distribution, local fund structures for different markets, and increasingly complex products all demand an operating model that can flex and grow. For the panel, however, the devil is in the detail. In-house and third-party ManCos both remain valid choices, but the context is key.
Control is not lost. It is applied differently
Perhaps the most persistent misconception is that delegating ManCo functions means giving up control. Legally, this isn't the case. A fund's board and ManCo retain ultimate responsibility, and governing bodies must always be able to direct, challenge, or replace their delegates.
What has changed is how control is expressed, and how much of it a ManCo should hold onto versus hand over. The panel discussed this in detail, including where the line sits between shared responsibility and diluted responsibility, and what that means in practice when something goes wrong.
A question every boardroom should be asking
For any asset manager reconsidering its operating model, the panel agreed on one thing: this is a strategic decision, not an operational one, and it belongs in the boardroom, not with a single function head.
The starting point is a clear view of core competencies. Where does your business create genuine value for clients? And which activities, however important, might sit better with a specialist partner?
Luxembourg is the second-largest fund domicile globally after the United States. It is home to a wide mix of in-house and third-party ManCos, and that is likely to continue. The shift we are witnessing is that many asset managers, particularly newer entrants, are now starting out with partnership model, viewing it as the more practical route to scale. It is for this reason that 3rd party ManCos meanwhile account for approximately 20% of the market, expected to further increase their share.
Watch the webinar to learn what separates a genuine ManCo partnership from a simple outsourcing arrangement; how Luxembourg's regulatory framework is evolving to support scalable operating models; and the strongest arguments both for and against third-party ManCos.
