Luxembourg funds sector outlook in 2026

Renaud Oury on Luxembourg’s funds sector in 2026

Luxembourg’s asset-management sector is set to be shaped by advanced digitalisation, AI-driven operations, and broader access to alternative assets in 2026. We expect firms to focus on innovation and efficiency, navigating evolving regulations and increased governance expectations. The rise of tokenisation and personalised digital services will boost competitiveness, while talent shortages and compliance demands remain key challenges for growth and transformation. 

Building on the trends of 2025 in Luxembourg

The asset-management sector in Luxembourg is being shaped by several key themes. One of the most significant is digitalisation and technology adoption. Industry players are increasingly leveraging AI, automation, and cloud-based infrastructures to streamline operations, enhance risk monitoring, and reinforce cybersecurity frameworks. At the same time, interest in digital assets and tokenisation is rising.

Secondly, alternative investments and cross-border fund distribution continue to gain traction. The domestic ecosystem is seeing robust growth in private assets and AIFMs, and Luxembourg remains a major hub for cross-border distribution of collective investment funds.
Finally, a strong emphasis on governance and regulatory substance is evident. Firms are reinforcing board composition, separation of duties and tax oversight, while tokenisation of assets is steadily being embedded in fund structuring.

The rise of digital services

We have seen an increased interest in our Apex Digital 3.0 offering, particularly across tokenisation, digital fund distribution, and blockchain-enabled fund services. Asset managers are increasingly looking to digitise traditional assets, improve liquidity, streamline costs, and reach broader investor bases through fractional ownership and on-chain structures. Apex Digital 3.0 meets this demand by offering a compliant, end-to-end infrastructure that bridges traditional finance with blockchain technology - covering asset creation, issuance, distribution, and lifecycle servicing. 

Interest has also grown in stablecoin and tokenised fund solutions, reflecting a broader industry shift toward 24/7, transparent, and programmable markets. This surge is driven by regulatory evolution, operational efficiency needs, and the search for new access channels. 
Overall, our integrated digital ecosystem positions us at the forefront of the transition from conventional fund servicing to a digitally enabled, future-proof model for asset management.

The trends set to dominate the asset-management industry in Luxembourg in 2026

1. Enhanced digital infrastructure and AI-driven operating models
   
   Firms in Luxembourg will push further into automation, data analytics, and generative AI to boost efficiency, reduce cost-bases, and support product innovation. As highlighted in recent surveys, digitalisation is viewed as critical by nearly 90 % of management-companies in Luxembourg.  
   
   The shift to digital transformation and adoption of AI-driven operating models will have the greatest positive impact on Luxembourg companies. This shift goes beyond efficiency gains. It is fundamentally reshaping how funds are managed, distributed, and serviced. By integrating AI, data analytics, and automation into portfolio management, compliance, and client reporting, management companies can achieve higher scalability and precision while reducing operational risks. It also enhances Luxembourg’s competitiveness as a global fund hub, offering faster onboarding, improved transparency, and better investor experiences.
   
   Moreover, digitalisation complements other key developments such as tokenisation and data integration, creating new business models and strengthening Luxembourg’s appeal as an innovation-friendly jurisdiction.
   
   In essence, while regulatory evolution and private-market expansion will remain crucial, technology-enabled transformation is expected to be the most powerful driver of sustainable growth and differentiation in 2026.
   
   
2. Deepening private markets / alternative assets and retailisation
   
   The shift into alternatives such as private equity, real estate debt, and infrastructure will accelerate, and Luxembourg is well positioned to facilitate access. Moreover, making these asset classes available to retail or mass-affluent investors will likely be a priority as regulatory frameworks (e.g., the revised ELTIF 2.0 that came into effect in early 2024) gain traction. 
   One major advantage of ELTIFs for promoters is distribution. As no additional distribution authorisations are necessary, the ELTIF can be marketed in other EU countries without any obstacles, an advantage especially applicable in the retail segment.
   
   Mid 2025, Luxembourg remained the leader with 117 registered ELTIFs, followed by France (38), Ireland (13), and Italy (13).
   
   
3. Regulatory evolution, governance, and fund-structuring innovation
   
   As a reminder, following publication of the AIFMD II text in the Official Journal of the EU on March 26, 2024, the text came into force on April 15, 2024, and must be implemented by Member States by April 16, 2026.
   
   The implementation of frameworks such as AIFMD II in Luxembourg will force asset managers to revisit fund set-up, governance, substance, and transparency.  At the same time, product innovation, for example via active ETFs or tokenised funds, will continue to shape fund structuring strategies.  
   
   In short, investment into operating-model resilience, broader access to alternatives, and an evolving regulatory/structural backdrop will define the agenda for Luxembourg-based asset managers in 2026.

Navigating obstacles ahead

The biggest challenge for Luxembourg’s asset management industry in 2026 will likely be navigating an increasingly complex regulatory and operational landscape while maintaining efficiency and profitability.

With the implementation of AIFMD II, ongoing ESG disclosure requirements, and enhanced substance and governance expectations, management companies will face mounting compliance burdens and higher operating costs. Balancing these regulatory demands with the need to innovate through digitalisation, tokenisation, and alternative investment expansion will test both resources and agility.

Additionally, talent scarcity, particularly in risk management, data science, and regulatory compliance, is expected to intensify. This could slow transformation efforts and place pressure on smaller or mid-sized firms.

In short, 2026 will challenge Luxembourg asset managers to harmonise growth, innovation, and compliance, ensuring that technological progress and market expansion do not come at the expense of governance quality or operational resilience.

The impact of AI and technology advances in Luxembourg in 2026

In 2026, AI and technological advances are set to transform the asset management industry, particularly in the way data is used, operational efficiency, and client experience. AI-driven tools will enhance portfolio construction and risk management, enabling managers to analyse vast, unstructured datasets (e.g., ESG metrics, sentiment data, private market intelligence) with greater accuracy and speed. This will lead to more informed investment decisions and improved alpha generation.

Operationally, automation and intelligent workflows will streamline compliance, reporting, and fund administration, which will be critical as regulatory complexity rises under frameworks like AIFMD II. Firms will also adopt cloud-based infrastructure and AI-powered analytics to strengthen scalability, cybersecurity, and cost control.

On the client side, personalised reporting and predictive analytics will redefine investor engagement, offering greater transparency and tailored product offerings.

Overall, AI will shift the industry from reactive management to data-driven, proactive decision making, reinforcing Luxembourg’s reputation as an innovation leader in European fund management.