Setting up a fund in Luxembourg

In 1988, Luxembourg was the first EU member state to adapt its legislation to the European Directive governing Undertakings for Collective Investment in Transferable Securities (UCITS). This competitive advantage of being the first to offer to investment funds the European passport for cross-border distribution as well as the constant modernisation of the country’s legal and fiscal environment attracted fund promoters from all around the world.

Today, Luxembourg is Europe’s number 1 investment fund centre and the world’s leading hub for global fund distribution.

The continuing development of the Grand-Duchy as a centre of financial and investment fund services has led to a unique concentration of specialist service providers. This unparalleled blend of expertise in the areas of fund administration, management and distribution enables Luxembourg to offer fund promoters an extraordinarily wide range of investment products. These can be tailored to meet the needs of specific market sectors.

Luxembourg’s highly international investment fund industry also benefits from a very stable political and social environment. The Grand-Duchy of Luxembourg, a constitutional monarchy whose independence dates back to 1839, has a modern, dynamic and open economy with sound public finances.

Its strategic position in the heart of Europe and its skilled multicultural and multilingual workforce make Luxembourg the first choice for fund distribution. Residents and more than 140,000 commuters from neighbouring countries benefit from an excellent infrastructure and a very attractive lifestyle.

Flexible and business friendly authorities and a close working relationship between the business community and the Government will allow Luxembourg to continue to strengthen its position as one of the world’s most attractive investment fund centres.

Luxembourg regulated investment vehicles

Luxembourg offers a wide range of investment funds.

The majority of funds domiciled in Luxembourg are created as UCITS. These funds comply with the European Directives which regulate undertakings for collective investment in transferable securities, and are allowed to market their units/shares freely in all Member States of the European Union.

Although UCITS were initially intended only to be marketed across the European Union, the UCITS brand is now recognised as the only truly globally distributed investment fund product. As a result, an increasing number of asset managers are establishing UCITS funds with a clearly defined global distribution strategy.

Due to a great demand for alternative investments from investors throughout the world in recent years, Luxembourg has taken steps to modernise its laws and regulations and now offers a full range of investment products that cater for alternative investment, particularly hedge funds, private equity funds and real estate funds.

Pension legislation in Luxembourg gives it the lead on many other EU countries where pensions are considered from a purely domestic perspective. The Luxembourg pension laws were introduced in 1999 and 2000 and create a flexible and secure environment for domestic and pan-European pensions.

Luxembourg based exchange traded funds are cost effective and benefit from a flexible legislative framework.

Last but not least and due to a growing demand in recent years, Luxembourg offers a variety of attractive fund structures in terms of Shariah-compliant investment funds, microfinance investment vehicles and SRI vehicles.