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In the fund sector, the use of third-party ManCos is increasing, a trend expected to continue in the coming years. Over the past three years, the escalation of costs, regulatory fees, and stringent substance requirements have made more asset managers consider leaving the ManCo business and relying on third-party ManCos. This article examines why relying on third-party ManCos can be a benefit for leader asset managers and fund sector itself, by improving investor protection, introducing an additional layer of oversight and minimize potential conflicts of interest.
According to CSSF data, the total number of Super ManCos (AIFM & ManCo licenses) has been decreasing since 2019. Moreover, a strong decrease in the number of UCITS licenses has been registered, from 206 in 2018 to 171 in 2023, indicating market consolidation and the increasing challenges of maintaining a standalone operation in a complex regulatory environment and raising of operational costs.
As a result, over the past four years, there has been a reduction in the overall number of ManCos with leading asset managers increasingly shifting from in-house ManCos to third-party solutions or possibly the moving on the alternative investment fund structures.
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I am Diego Ofano, a Compliance and Anti-Money Laundering professional based in Luxembourg. I serve as Conducting Officer and RC/MLRO for a financial institution, overseeing regulatory compliance for EU-domiciled funds. My responsibilities include AML/CFT frameworks, due diligence, regulatory advisory, and training. I regularly deal with complex regulatory and operational matters, with a focus on pragmatic and risk-based solutions in the investment funds industry.
I hold a Law Degree from the University of Bologna, a Master in European Business from ESCP, and certifications like CAMS, keeping me current in compliance and technology.