The Fund Code. A History of Investment Funds in Luxembourg from the Holding Act to the UCITS Legislation (1929-1989)

This thesis introduces a comprehensive narrative of the history of Luxembourg’s investment funds, tracing their evolution from the incorporation of closed-end funds as holding companies in the 1930s to the enactment of two harmonization fund laws in the 1980s. Through a focus on the actors "behind the industry", the thesis identifies three enduring patterns. First, policymakers consistently employed "bifurcation of sovereignty" practices to stimulate the local fund market during systemic economic crises (notably, during the interwar years and the steel crisis of the late 1970s). Second, a robust tradition of collaboration among policymakers, entrepreneurial actors, and financial intermediaries, which ensured the drafting of legislation aligned with the market's needs. Third, while its domestic market remained limited in scale throughout the entire period, Luxembourg's fund “code of capital” proved highly efficient in attracting non-resident investors, in a context of light capital taxation for the fund management companies and the absence of withholding tax on the funds’ distributed dividends (particularly since 1981, within a national legal framework of “banking secrecy”).
Ultimately, the findings of this thesis underscore the relevance of financialization phenomena well before the 1970s-1980s. Furthermore, they highlight the intricate interplay between a small state, like Luxembourg, and larger entities, including overarching structures such as the European Community. The thesis contends indeed that the success of Luxembourg's fund industry is closely associated with its legislators' ability to occupy independent spaces untouched by European norms, particularly by utilizing the freedom of national decisions on fiscal charges for its fund industry.