EU Sponsors - A Cost‑efficient Luxembourg Fund Entry Point Using A Registered Manager

When planning for new alternative investment fund (AIF) structures, EU fund sponsors (EUFS) often realise that a Luxembourg AIF is best to target foreign investors. At the same time, EUFS are aware that Luxembourg fund structures often involve higher costs than domestic alternatives.

A Luxembourg AIF must appoint a fund manager. For EUFS, it can either be their in-house authorised alternative investment fund manager (Authorised AIFM) if the EUFS avail of one, or an authorised “host” AIFM in Luxembourg (Host AIFM). Host AIFMs come with a price tag, which explains partially the increased costs of Luxembourg fund structures.

However, for EUFS that wish to avoid the costs of a Host AIFM, the set-up with a Luxembourg registered AIFM could be a viable solution. The registered AIFM route is however only open to EUFS managing unleveraged closed-ended AIFs provided the asset under management in such AIFs are, on a group wide basis, below EUR 500 million. In case of leverage or open-ended