Q&A For EU Fund Managers Establishing A Luxembourg In-house AIFM

EU fund managers (EUFM) show an increased appetite for using their own Luxembourg-based licensed entity to manage their European private funds. Under EU regulations, such entity is referred to as an ‘authorised alternative investment fund manager’ (AIFM).

This Q&A provides concise and practical answers to the key questions that EUFM typically raise with us. This Q&A uses the term "In-House AIFM” for a Luxembourg AIFM that is controlled by the EUFM and “Host AIFM” for a Luxembourg third-party AIFM.

1. Why should we establish an In-House AIFM if we can also hire the services of a Host AIFM?

Fund managers in general and EUFM in particular usually prefer to manage their European funds through an authorised AIFM established in the EU because this provides access to an EU marketing passport, which facilitates the distribution of these funds across the EU (as opposed to of a so-called “sub-threshold” AIFM). The services of a Host AIFM can be hired for this purpose. Here the Host AIFM is