Luxembourg: Finance and Banking

The European regulatory framework's distinction between open-ended and closed-ended funds has significant implications for alternative investment fund managers, particularly with AIFMD 2 taking effect in April 2026. This analysis examines how semi-liquid evergreen funds—including rolling-vintage and run-off models—should be classified under EU rules, and why a mechanical application...

AIFMD II introduces risk retention rules requiring EU authorized alternative investment fund managers to retain at least 5% exposure when transferring originated loans to third parties.

Luxembourg offers a cost-efficient alternative for emerging fund managers through its registered AIFM structure, commonly known as the "small manager" route. This approach allows fund managers to establish Luxembourg AIFs while avoiding the substantial costs associated with authorised host AIFMs, though it comes with specific asset thresholds and marketing limitations.