4 reasons your Luxembourg fund needs an in-market administrator

January 25, 2023

Luxembourg ranks as the largest fund centre in Europe and second largest in the world. If you have funds based there, location should be a primary consideration when choosing a third-party administrator. Learn why in the article below.

When selecting a third-party administrator for a Luxembourg-based fund, the foundation for long-term satisfaction – like in real estate – starts with three words: location, location, location. Here are four reasons you should choose an in-market team with a simple, clear and contained operating model.

 

1. Outsourcing has significant drawbacks

Outsourcing, in one form or another, is commonplace throughout the fund servicing industry. On the surface, sending work (e.g., administration, reporting, fund accounting, etc.) to lower-cost countries seems like a sensible, cost-effective approach. Many administrators choose this operating model and subsequently entice clients with attractive prices. But often, inefficiencies and other disadvantages can grossly outweigh potential cost savings.

“In our experience, clients who work with providers that outsource functions around the globe are unhappy for many reasons,” says David Kubilus, U.S. Bank Global Fund Services Chief Commercial Officer. “They don’t know who to call. They have difficulty getting timely responses they or their investors need. There’s a lack of client focus. There are time zone issues. And the list goes on.”

At U.S. Bank, it’s a core belief of ours that the client experience is significantly improved when services are provided in-domicile. That’s our business model. All functions are handled in Luxembourg (or occasionally Ireland or the U.S. if it makes sense for the client), and the client has a single point contact for a smooth, efficient partnership.

2. An in-market administrator is an accountable administrator.

A high-quality service experience comes from finding the right expertise combined with the right cultural match. This balance is best achieved when an administrator has their service sites in the domicile of the client or the domicile of the fund. By contrast, an organizational structure that functionalizes and outsources processes and service models to remote locations often yields a disjointed client experience.

Partnering with an in-market administrator reduces distance, time zone and communication obstacles. Your team is accessible, which means they’re accountable. As a client, you know what individuals you’re working with and where they’re located. And you’re able to rely on them as an extension of your own office. With proximity, the relationship model becomes one of partnership and provides the following benefits:

  • Greater efficiency
  • Faster issue resolution
  • Increased responsiveness
  • Streamlined communication
    • Between service groups
    • With the client, investors and other parties

 

3. An accountable administrator cultivates an engaged team.

For an in-market administrator, client accountability creates a strong incentive to develop a culture where all disciplines cooperate, collaborate and work as a cohesive unit. This can generate numerous advantages for clients, including:

  • A solution-based relationship approach
  • Anticipation of needs
  • Proactive issue resolution
  • Accurate prioritization
     

In an engaged environment, there’s a simple and clear allocation of work, but everyone shares the same goal. Each employee feels a direct connection to the client rather than just to their specific task. They understand the importance of their role to the relationship as a whole. And this, in turn, fosters cross-functional knowledge and deep expertise for best-in-class service.

“In our experience, clients who work with providers that outsource functions around the globe are unhappy for many reasons.”

4. An engaged team prioritizes the client experience.

The best administrators prioritize proactiveness, responsiveness and flexibility to ensure you’re able to get what you need when you need it.

“When you have an engaged team, your satisfaction as the client ranks as the driving motivational force,” says Didier Delvaux, country head of Luxembourg for U.S. Bank. “Their focus is fixed on finding specialized ways to meet your specific needs rather than just checking the boxes on transactional assignments.”

In short, you want an administrator who won't let anything compromise the client experience. But this involves more than just desire. It requires infrastructure, resources and ongoing commitment. Look for a partner with the following characteristics:

  • Robust, next-generation technology platform
  • Financial strength and stability
  • Flexibility to accommodate your specific structures and strategies
  • Full range of fund administration, depositary, custody and account service capabilities
  • Local experience
     

If you have a Luxembourg-based fund or you are considering one, make sure to thoroughly evaluate your administrators – specifically their service model and locations – to determine how they align with your needs.

 

For more information on our Luxembourg fund servicing solutions, visit usbank.com/lu.

Related content

Ask an expert Q&A: 3 US ETF trends and their impact in Europe

High-yield bond issuance: how to avoid 5 common pain points

European outlook: Trustee experience more important than ever

Trends in economics, immigration and mobility policy

Emerging trends in Europe: An outlook from multiple perspectives

Liquidity management: A renewed focus for European funds

Administrator accountability: 5 questions to evaluate outsourcing risks

3 innovative approaches to ESG investing in Europe

Rethinking European ETFs: Strategy wrappers and a means to an end

Unique requirements of large private equity firms

Case study: U.S. asset manager expands to Europe

Key considerations for launching an ILP

For small business growth, consider the international market

6 risks you need to manage when expanding your global footprint

Ask an expert Q&A: 3 US ETF trends and their impact in Europe

The benefit of a multi-jurisdictional European trustee

Programme debt clients want reliable service – no matter where they’re based

Luxembourg's thriving private debt market

6 benefits of a multiple-role service model for European funds

Luxembourg funds: 5 indicators of efficient onboarding

Easier onboarding: What to look for in an administrator

ESG-focused investing: A closer look at the disclosure regulation

4 reasons your Luxembourg fund needs an in-market administrator

Combined strength: Luxembourg and your fund administrator

3 tips to maintain flexibility in supply chain management

5 questions you should ask your custodian about outsourcing

10 ways a global custodian can support your growth

The reciprocal benefits of a custodial partnership: A case study

The benefits of a full-service warehouse custodian

Depositary services: A brief overview

Benefits of billing foreign customers in their own currency

Avoiding the pitfalls of warehouse lending

Complying with changes in fund regulations

Crack the Swift code for sending international wires

4 benefits to paying foreign suppliers in their own currency

Alternative investments: How to track returns and meet your goals

Middle-market direct lending: Obstacles and opportunities

An asset manager’s secret to saving time and money

Disclosures

Investment products and services are:

NOT A DEPOSIT • NOT FDIC INSURED • MAY LOSE VALUE • NOT BANK GUARANTEED • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

U.S. Bank Global Fund Services is a wholly owned subsidiary of U.S. Bank, N. A.

U.S. Bank Global Fund Services (Ireland) Limited is registered in Ireland, Company Number 413707. Registered Office at 24 - 26 City Quay, Dublin 2, Ireland. Directors: Eimear Cowhey, Ken Somerville, Brett Meili (USA), Hosni Shadid (USA). U.S. Bank Global Fund Services (Ireland) Limited is regulated by the Central Bank of Ireland.

U.S. Bank Global Fund Services (Guernsey) Limited is licensed under the Protection of Investors (Bailiwick of Guernsey) Law, 2020, as amended, by the Guernsey Financial Services Commission to conduct controlled investment business in the Bailiwick of Guernsey.

U.S. Bank Global Fund Services (Luxembourg) S.a.r.l. is registered in Luxembourg with RCS number B238278 and Registered Office: Floor 3, K2 Ballade, 4, rue Albert Borschette, L-1246 Luxembourg. U.S. Bank Global Fund Services (Luxembourg) S.a.r.l. is authorised and regulated by the Commission de Surveillance du Secteur Financier.

U.S. Bank does not guarantee products, services or performance of its affiliates and third-party providers.

Start of disclosure content

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, Home Equity and Credit products are offered through U.S. Bank National Association. Deposit products are offered through U.S. Bank National Association. Member FDIC.