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Luxembourg Reserved Alternative Investment Fund (RAIF)


The Reserved Alternative Investment Fund (RAIF) vehicle combines the characteristics and structuring flexibilities of Luxembourg regulated specialised investment funds (SIFs) and investment companies in risk capital (SICARs) qualifying as AIFs managed by an authorised AIFM, except that RAIFs are not subject to CSSF approval before they are launched. This permits the achievement of a significantly enhanced time-to-market for new fund launches.

The RAIF regime is optional. The constitutive documents must expressly provide that the investment vehicle is subject to the provisions of the RAIF Law.

Read the press release Luxembourg's reserved alternative investment fund vehicle approved.


Investment in a RAIF is reserved for “well-informed” investors requiring a limited level of protection and looking for investment flexibility suitable to their particular expertise and needs. This term comprises:

* Other investors are those who confirm in writing that they adhere to the status of “well-informed” investors and who either (i) invest a minimum of EUR 125,000 or (ii) have been assessed by a credit institution, an investment firm or a management company which certifies the investors’ ability to understand the risks associated with investing in the RAIF

Legal framework

The RAIF was introduced by the Luxembourg Law of 23 July 2016 (RAIF Law, click here).

Eligible assets and risk diversification requirements

There is no restriction in terms of eligible assets of a RAIF.

RAIFs are subject to the principle of risk-spreading. In the absence of any detailed rules in the RAIF Law itself, the principles of risk-spreading and its interpretation in relation to SIFs should be taken into account.

However, if the RAIF’s constitutional documents provide for exclusive investments in risk capital (like SICARs), the principle of risk spreading won’t apply.

Legal form

A RAIF may take the legal form of a common fund (FCP – fonds commun de placement) or may be constituted as an investment company (SICAV – Société d’investissement à capital variable or SICAF – Société d’investissement à capital fixe). Other legal forms are possible.

The FCP has no legal personality and thus must be managed by a management company.

A SICAV/SICAF may take one of six possible legal forms:

These different entities may be set up as a single fund or as an umbrella fund consisting of multiple compartments, each with a different investment policy. The compartment of an umbrella RAIF can invest in one or more other compartments of the same RAIF. The fund and compartments respectively may have an unlimited number of share classes, depending on the needs of the investors to whom the fund is distributed.

The structures may be open-ended or closed-ended, for both subscriptions and redemptions. 

Capital requirement and other aspects

The net assets of a RAIF may not be less than EUR 1,250,000. This minimum must be reached within a period of twelve months following its authorisation. Only 5% of the capital needs to be paid up on subscription.

Unless otherwise provided for, the assets of a RAIF must be valued at fair value.

Management and marketing of RAIFs

In order to ensure sufficient protection and regulation via its manager, RAIFs can only be managed by authorised Alternative Investment Fund Managers (AIFMs), i.e. managers managing portfolios of Alternative Investment Funds (AIFs) whose assets under management in total exceed the thresholds defined by article 3 (2) Luxembourg AIFM Law. Below-threshold AIFMs cannot manage RAIFs.

Moreover, the manager must be an external AIFM, i.e. a legal person appointed by the RAIF or on behalf of the RAIF and which through this appointment is responsible for managing the RAIF. A RAIF cannot take the form of an internally-managed AIF.

The authorised external AIFM managing the RAIF can be domiciled in Luxembourg or in any other Member State of the EU. Once the AIFMD third country passport becomes applicable, the AIFM can also be domiciled in a third country.

Authorised AIFMs can – subject to certain formalities – market shares and units of RAIFs to investors domiciled in other EU Member States (and EEA countries respectively). Marketing to investors outside the EU depends on the rules of the non-EU Member State concerned.

Establishment of a RAIF and offering document

RAIFs are established by notarial certification. It is sufficient to certify that the AIFM confirms the fund’s creation, and that this information is published in the official gazette Mémorial. This means that the fund’s constitutional documents do not have to be certified by a notary.

The RAIF is entered in a list held by the Luxembourg trade and companies register.

For each RAIF an offering document must be prepared which indicates on its front page that the fund is not subject to supervision in Luxembourg.

Under certain conditions, distinct offering documents can be prepared for compartments of an umbrella RAIF.


A RAIF is subject to a reduced subscription tax (taxe d’abonnement) of 0.01% p.a. of its NAV, unless it is tax exempt, which is possible for certain money market, pension and microfinance funds, funds investing in other funds already subject to subscription tax.

However, if a RAIF invests exclusively – in line with its constitutional documents – in risk capital, it is subject to the SICAR tax regime (in its entirety), which means:

  • it is not subject to subscription tax;
  • it pays the ordinary income tax, unless a tax exemption applies (e.g. for income derived from transferable securities);
  • the auditor must confirm the investment in risk capital.

Compartments of umbrella funds are subject to the same tax regime, i.e. it is not possible to set up within the same umbrella fund compartments subject to the subscription tax and compartments subject to the SICAR tax regime.

Service providers

Management company:

A common fund has no legal personality and thus must be managed by a management company.

The individuals who effectively conduct the business of a management company must be of good repute and be sufficiently experienced in relation to the type of RAIF to be managed. The management company must have an initial capital of at least EUR 125,000. 


Luxembourg RAIFs must appoint a depositary which is responsible for both the safekeeping of assets and the supervision of the fund and, if applicable, its management company.

The individuals who represent the depositary bank must be of good repute and have sufficient and relevant experience.


The fund (SICAV) or its management company (FCP) prepares an annual report which is to be audited by a Luxembourg statutory auditor with appropriate professional experience. There is no obligation to produce a semi-annual report.

Updated on 23/03/17  
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