LUXEMBOURG - Funds registered in Luxembourg have seen a drop in net assets of 5.2% in the year to date, despite the number of funds moving to the country having increased.

Claude Kremer, chairman of the Association of the Luxembourg Fund Industry (ALFI), said during a conference in Luxembourg on Tuesday a particularly steep decrease was found on the equity side of funds, causing losses in the last half of 2007.

He was, of course, keen to stress Luxembourg was not the exception: "Global turbulence has impacted on Luxembourg, just like on the rest of the world," he said.

Kremer contrasted the losses with the 800 new funds signed to Luxembourg registration in 2007 - more than in the period between 2004 and 2006 combined.

According to ALFI, the fund inflow was boosted by the new Specialised Investment Funds (SIF) legislation, introduced in February 2007, which is said to have attracted interest from a growing number of pension funds across the globe.

In January 2008, Luxembourg had 2932 registered funds, seeing a growth rate of 29.73% over 12 months.

Kremer said Germany, Austria and Switzerland were Luxembourg's best customers, with 3000, 2500 and 2300 total fund registrations respectively.

He claimed pension fund investors, in particular, are attracted by the value that Luxembourg's legislative framework adds to the domicile, speculating this regulation might be one of the reason why, for instance, hedge funds keep away from the country.

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