A first mover in the implementation of European fund regulation, Luxembourg has played a pivotal role in opening up markets for international fund distribution and providing European retail and institutional clients access to international investments.
Luxembourg-domiciled investment funds are distributed in over 70 countries, with a particular focus on Europe, Asia, Latin America and the Middle East.
The world’s leading asset managers have chosen Luxembourg as the centre for their international fund ranges. The Grand Duchy offers unrivaled international expertise as well as a wide-ranging toolbox of investment vehicles.
This ‘toolbox’ includes:
- UCITS (Undertakings for Collective Investment in Transferable Securities) – A regulated fund for retail and institutional investors
- SIF (Specialised Investment Fund) – A flexible, efficient multipurpose vehicle,
- SICAR (Investment Company in Risk Capital) – Specifically designed for private equity investment and venture capital
- UCI (Undertakings for Collective Investment) – Part II, a flexible, more regulated pooled vehicle
- RAIF (Reserved Alternative Investment Fund) – A fund with quick time-to-market, indirectly regulated via the alternative investment fund manager
Average AuM in regulated investment funds
Handling 62% all cross-border investment funds worldwide from over 70 countries
Out of the top 100 asset managers wordwide, 98 have funds domiciled in Luxembourg.
UCITS: First mover advantage
Luxembourg is the favourite domicile for Undertakings for Collective Investment in Transferable Securities (UCITS), the world’s only truly global fund product, offering the highest possible levels of investor protection.
Luxembourg’s UCITS funds have become a strong global brand, but this strength stems from a smart decision in 1985. Luxembourg was the first country to implement the UCITS Directive into national law. This ‘first mover advantage’ attracted many international fund promoters.
UCITS are now widely sold both to the public and to institutional investors across the globe. Pension funds in particular rely on UCITS to diversify their portfolios with a well-regulated product.
Luxembourg has a market share of 36% in European UCITS, accounting for €3.5 billion AuM.
(EFAMA Q2 2018)
Alternative funds
Luxembourg is a prime location for private equity and venture capital, hedge funds and real estate funds.
The country’s financial environment has given rise to a number of structures designed to facilitate PE and real estate acquisitions with cross-border components.
And when it comes to back-office, middle-office functions and outsourcing solutions, numerous cost-efficient options are available.
In Luxembourg, alternative funds are able to tailor solutions for clients and financial professionals alike by combining characteristics from various jurisdictions. The needs of clients from both common-law- and civil-law based jurisdictions can be accommodated.
billion in AuM by
alternative funds
of global private equity investments are structured using Luxembourg vehicles
The top 13 global PE houses have operations in Luxembourg
First class fund regulation
The Alternative Investment Fund Managers Directive (AIFMD), which grants a European passport to the managers of alternative funds came into effect in 2013. Rapid implementation of the Directive has helped Luxembourg to further develop its role as a well-regulated hub for the global alternative investment industry.
Luxembourg chose this moment to overhaul and modernise its limited partnership regime, ensuring maximum compatibility and flexibility under the new AIFMD rules, with a structure more familiar to asset managers from English-speaking countries.
Luxembourg has demonstrated the capacity to develop the fund business in a very positive way. It is a first mover in implementing European fund regulation, and this has opened new markets for us in fund distribution across the globe.”
FRÉDÉRIC PERARD, MANAGING DIRECTOR, BNP PARIBAS SECURITIES SERVICES
