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Managers of alternative investment funds



Managers of alternative investment funds are subject to the rules of Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers (AIFMD), which was transposed into national law by the Luxembourg Law of 12 July 2013 on alternative investment fund managers (AIFM Law).

The term “Alternative Investment Funds (AIF)” as provided by the AIFMD refers to collective investment undertakings, which raise capital from a number of investors with a view to investing it in accordance with a defined investment strategy for the benefit of those investors, and which do no not qualify as UCITS. Hedge funds, real estate and infrastructure funds, private equity funds etc. are therefore targeted by the AIFMD, regardless of their current legal regime or form. In Luxembourg, Part II UCIs, SIFs, SICARs and non-regulated investment vehicles can qualify as AIFs in this sense.

However, the AIFM Law provides exemptions for managers of smaller AIFs:

  • AIFMs managing AIFs which are not leveraged and without redemption rights for a period of five years, and with aggregate assets under management below 500 million EUR;
  • AIFMs managing AIFs whose assets under management, including any assets acquired through the use of leverage, do not exceed 100 million EUR.

They must register with the CSSF and can decide to opt in to the application of the AIFM regime to benefit from the marketing passport. However, many managers of smaller private equity or social entrepreneurship funds would consider the organisational requirements and transparency requirements deriving from the AIFMD as burdensome. For these types of managers, the European Union acknowledged the need to overcome the existence of multiple fragmented national regimes by introducing a separate marketing passport regime under the Regulation on European venture capital funds (EuVECA) and the Regulation on European social entrepreneurship funds (EuSEF) respectively. The rules of both regulations do only apply if a fund wishes to use the denomination EuVECA or EuSEF, i.e. funds exempt from the AIFM Law are not per se obliged to meet the provisions of the regulations. But if they want to benefit from an EU marketing passport, they will have to register with the competent authority and are governed by the related rules.


Prior to the adoption of the AIFMD, managers of alternative investment funds (AIFMs) were often licensed for portfolio management and / or investment advice under MiFID. Now they are subject to a legislative framework which primarily focusses on the management of alternative investment funds, but indirectly also on the funds themselves.

When the AIF is internally-managed, the fund itself can be considered as AIFM.

UCITS management companies may apply for authorisation as AIFMs, and vice versa, in order to manage both UCITS and AIFs. MiFID compliant investment firms and credit institutions are not required to obtain an authorisation under the AIFM Law to provide investment services to AIFs or AIFMs, but shares or units of AIFs in the EU can only be marketed in accordance with the AIFMD.

Where Luxembourg is the home Member State of the AIFM or the Member State of reference for a non-EU AIFM, authorisation as AIFM is to be sought from the CSSF.

The AIFM Law provides further details on the AIFM’s operating conditions, the valuation of fund assets, the setting up of a remuneration policy, the possibility of delegating AIFM functions, the requirement to appoint a depositary and existing transparency requirements.

In return for more regulation, authorised AIFMs benefit from a passport enabling them to offer their management services and market their AIFs throughout the EU. The passport is subject to a notification procedure between the regulator of the EU Member State of establishment of the AIFM and the EU Member State being marketed into.

Click here to access the law and further guidance published by the Luxembourg regulator.

Guidelines and recommendations published by ALFI are made available in this section.

This link leads to the section on brochures on alternative investment funds published by ALFI.


The EuVECA and EuSEF regulations lay down uniform requirements and conditions for managers of funds that wish to use the designation EuVECA / EUSEF in relation to the marketing of qualifying venture capital / social entrepreneurship funds in the European Union. They also lay down uniform rules for the marketing of these funds to eligible investors across the EU, for the funds’ portfolio composition, for the eligible investment instruments and techniques to be used as well as for the organisation, conduct and transparency of managers that market qualifying venture capital / social entrepreneurship funds across the EU.

Managers wishing to be subject to one of the two regimes have to inform their competent authorities. They will be not authorised but registered and can market eligible funds to professional investors in the EU.

Qualifying venture capital / social entrepreneurship funds must invest at least 70% in eligible undertakings and their aggregate assets under management should remain below 500 million EUR. If this threshold is exceeded, the managers are subject to authorisation under the AIFMD, but may continue to use the designation EuVECA or EuSEF provided certain conditions set by the respective regulation are met.

Registered managers of qualifying venture capital / social entrepreneurship funds may additionally manage UCITS, subject to authorisation under Directive 2009/65/EC.

Guidelines and recommendations published by ALFI are made available in this section.

This link leads to the section on brochures on alternative investment funds published by ALFI, and this one to the section on brochures on responsible investing.




Updated on 17/01/17  
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