The Role of Fund Managers in LuxembourgUpdated on Sunday 12th September 2021
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If you want to open an investment fund in Luxembourg, you will most likely need to appoint a fund manager. The need to appoint a fund manager in Luxembourg will depend based on the type of fund that you want to set up in this country. If you will have to appoint a fund manager, you should also be aware on the responsibilities and obligations one has under this function.
This is why our team of financial advisors has prepared an article regarding the role of fund managers in Luxembourg and other important information that should be of help for both local and foreign businessmen who want to open a fund in this country.
Things to know on the fund manager profession in Luxembourg
A fund manager in Luxembourg is the person who has as a main responsibility creating suitable investment strategies for the fund he or she represents. Given that in Luxembourg one can set up numerous types of funds, an investment strategy that is recommended for a fund may not be recommended for another fund type, and this is why investors will have to address to a fund manager with a solid activity and results in this industry.
Please mind that regardless of the fund type, such as hedge fund or a SICAR in Luxembourg, the investor will have to pay a specific fee to the fund manager, who is customarily paid by a percentage of the fund’s assets under management. The fund manager in Luxembourg is paid with a generous salary, but the work is generally stressful and the person will work, in theory, 40 hours a week, but overtime is very common in this profession.
The work activity of a fund manager is mainly related to the stock market, where the person needs to trade the assets of the fund following rigorous investments models. This is why, the fund manager in Luxembourg will most likely start his or her day when the market is open, and close it when the stock market is closed.
The fund manager is obligated to manage the fund’s assets in a manner that will result in a successful return on investment, but the management of the assets will always be done taking into consideration the client’s risk preferences. Thus, investors who have open an investment fund in Luxembourg with low risks will definitely not want their fund manager to apply investment strategies that involve a high risk for the investors’ money.
Amongst other responsibilities, the fund manager in Luxembourg is required to prepare reports for his or her clients, where the manager will present the results of the investment strategies applied to an investment fund. The fund manager is also responsible for preparing new investment proposals, where the clients will receive very clear information on how the respective strategies may provide a possible positive financial outcome.
What is the legal framework applicable to a fund manager in Luxembourg?
Given the level of complexity of this profession, fund managers are required to obtain an authorization for developing this activity. In Luxembourg, fund managers are regulated by the UCI Law or the AIFM Law (or both, in certain cases). In some cases, the fund manager in Luxembourg will need an approval from the CSSF, the institution regulating the financial industry in this country.
If you need more details on the law referring to fund managers, you can request more details from our team of financial experts. However, we have also prepared a short presentation on being a fund manager in Luxembourg, which you can read below:
- fund managers must comply with the Directive 2009/65/EC, regarding their fee policies;
- at the same time, they must comply with the Circular 10/437 issued by the CSSF;
- one of the laws applicable to fund managers is the Alternative Investment Fund Managers Law of 12 July 2013;
- the manager of a fund can pay a commission to the distributor of the fund in accordance with the rules of the Directive 2014/65/EU;
- the manager also has specific obligations under the CSSF Circular 18/698.
What are the trends for fund managers in Luxembourg?
Luxembourg is one of the leading jurisdictions at a global level for the registration on investment funds. Both local and foreign businessmen find here attractive policies and incentives and it is important to know that foreign funds are distributed on the local market, through the activities carried out by foreign fund managers, who have created investment strategies to expand on other markets through Luxembourg.
If you need more details on other matters concerning this profession or if you want to appoint a fund manager in Luxembourg for your fund, no dot hesitate to contact our team of financial advisors, who are ready to assist you in any inquiry that you may have regarding this subject.