Types of Investment Funds in Luxembourg
Updated on Tuesday 21st February 2023
Rate this article 2 reviewsbased on
Luxembourg is the top investment destination for foreign businessmen interested in performing investment activities in Europe. The legislative framework applicable in this jurisdiction provides a wide range of investment funds, addressed to all the available categories of investors. The procedure on how to start an investment fund may depend based on its characteristics, the level of investment and other similar conditions.
Undertakings for collective investments in Luxembourg
The investment funds in Luxembourg that can be set up as undertakings for collective investments (UCIs) can be registered under two main categories:
• undertakings for collective investments in transferable securities (UCITS);
• alternative investment funds (AIFs).
The UCITS vehicles are registered in Luxembourg following the European Union’s Directives, while the AIFs can cover a wide range of investment funds. Investors who are interested in hedge fund startup in Luxembourg can register the entity as an AIF.
AIFs can take the following forms:
• hedge funds;
• real estate investment funds;
• venture capital funds;
• private equitdy funds.
You may learn more about the Cayman Islands segregated portfolio company in our magazine. The ability to employ distinct portfolios, which is particularly helpful for investments that can use different cells to hold their clients' assets, is its key feature. Contact our Cayman Islands specialists for further information.
Legal entities for UCIs in Luxembourg
The procedure on how to start a hedge fund in Luxembourg registered as an UCI begins by choosing a legal entity. Funds established as UCITS can be set up as one of the following:
• common investment fund (FCP);
• investment company with variable capital (SICAV);
• investment company with fixed capital (SICAR).
An advantage of registering these types of funds refers to the fact that they are allowed to perform several investment strategies at the same time, by establishing compartments within the fund.
Specialized investment funds in Luxembourg
Another type of fund which can be registered in Luxembourg is the specialized investment fund (SIF), addressed to professional and institutional investors, who have an extensive knowledge in the field.
The minimum capital participation is established at EUR 125,000 and one of the advantages of this structure is given by the fact that there are fewer regulations, thus providing more flexibility for investment purposes.
The legislative framework available in Luxembourg offers other types of investment funds, such as the investment company in risk capital (SICAR). Please contact our team of affiliates in Luxembourg for a detailed presentation on this matter.