“The Luxembourg Raif law provides an additional – complementary – alternative investment fund vehicle which is similar to the Luxembourg [specialist investment fund] regime,” said Denise Voss, chairman of the Association of the Luxembourg Fund Industry (Alfi).
“Unlike the Sif, the Raif does not require approval of the Luxembourg regulator, the CSSF, but is supervised via its alternative investment fund manager (AIFM), which must submit regular reports to the regulator.”
When the law was drafted in December 2015, Jacques Elvinger, chairman of Alfi’s regulation advisory board, explained that fund managers will benefit from a reduced time-to-market.
Depending on investor preference, Luxembourg managers will now have a choice, Voss explained.
They can set up their alternative investment funds as Part II UCIs, Sifs or Sicars if they prefer direct supervision of the fund by the CSSF.
"As is the case for Luxembourg Sifs and Sicars, shares or units of Raifs can only be sold to well-informed investors.”
Alternatively they can set up their alternative investment fund as a Raif.
For well-informed investors only
Freddy Brausch, vice-chairman of Alfi with responsibility for national affairs, added: “In order to ensure sufficient protection and regulation via its manager, a Raif must be managed by an authorised external AIFM. The latter can be domiciled in Luxembourg or in any other member state of the EU.
“If it is authorised and fully in line with the requirements of the AIFMD, the AIFM can make use of the marketing passport to market shares or units of Raifs on a cross-border basis. As is the case for Luxembourg Sifs and Sicars, shares or units of Raifs can only be sold to well-informed investors,” Brausch said.