Luxembourg approves Reserved Alternative Investment Fund vehicle
The law introducing a new Luxembourg alternative fund structure, the Reserved Alternative Investment Fund (RAIF), has been approved by the Luxembourg Parliament and will come into force three days after publication in Luxembourg’s Official Gazette Mémorial.
Denise Voss (pictured), chairman of the Association of the Luxembourg Fund Industry, says: “The Luxembourg RAIF Law provides an additional – complementary – alternative investment fund vehicle which is similar to the Luxembourg SIF regime. Unlike the SIF, the RAIF does not require approval of the Luxembourg regulator, the CSSF, but is supervised via its alternative investment fund manager (AIFM), which must submit regular reports to the regulator.
“Luxembourg managers will therefore have a choice, depending on investor preference. They can set up their alternative investment funds as Part II UCIs, SIFs or SICARs if they prefer direct supervision of the fund by the CSSF. Alternatively they can set up their alternative investment fund as a RAIF, thereby reducing time-to-market."
Freddy Brausch, vice-chairman of ALFI with responsibility for national affairs, adds: “In order to ensure sufficient protection and regulation via its manager, a RAIF must be managed by an authorised external AIFM. The latter can be domiciled in Luxembourg or in any other member state of the EU. If it is authorised and fully in line with the requirements of the AIFMD, the AIFM can make use of the marketing passport to market shares or units of RAIFs on a cross-border basis. As is the case for Luxembourg SIFs and SICARs, shares or units of RAIFs can only be sold to well-informed investors.”
Voss says: “The new structure complements Luxembourg’s attractive range of investment fund products and we believe this demonstrates the understanding the Luxembourg legislator has of the needs of the fund industry in order to best serve the interests of investors.”