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 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. 

 

Does a fund manager in Luxembourg need to be registered as a legal entity?  

1. UCITS management companies; 
2. management companies organized as other entities;
3. Luxembourg branches of foreign investment fund managers (IFMs);
4. self-managed investment companies;
5. authorized AIFMs;
6. internally managed AIFs.  

 

 

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. 

 

 

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: 

 

 

Data on IFM in Luxembourg  

• 45% of all fund managers were registered as AIFMs;
• the rest, of 55%, were registered by the 2010 Law and the 2013 Law (the latter regulates the AIFMs as well);
• the number of authorized IFMs revolved around 300 (the highest number, of 301, was registered in June 2023, while the lowest number, of 298, was registered in December 2023 – please mind that these values refer to companies registered as IFM in Luxembourg, not individuals);
• the largest number of authorized IFMs originated from Germany (44), France (36), Switzerland (35), United States of America (32), Luxembourg (31);
• the total value of assets under management managed by IFMs accounted for EUR 5,215.2 billion.  

 

A fund manager in Luxembourg will opt for different investment strategies based on the type of fund. As such, the investment strategies applicable to a SICAR in Luxembourg can be different from the ones applicable to a RAIF in Luxembourg. According to CSSF, by the end of 2023, fund managers opted for the following: 

 

 

The highest share was observed for variable income transferable securities, accounting for 26.4% of all investment strategies. Funds operating as UCITS represented the highest shares of investment activities (accounting for 64.2%).  

 

 

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.

 

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.