As at June 30, 2007, alternative investment Funds represent roughly EUR 187 billion (USD 252 bn), or 9% of the total assets under management in Luxembourg.
This figure includes all products serviced from all jurisdictions and administered in Luxembourg (Source: ALFI).
In Luxembourg, the appetite for alternative investment strategies is growing. Currently, a total number of 79 Hedge Funds and 100 offshore Hedge Funds are domiciled and/or administered in Luxembourg, corresponding to EUR 58 566 million (USD 79 094 m), respectively EUR 18 515 million (USD 25 004 m) of assets under administration.
Similarly, a total number of 145 Funds of Hedge Funds and 237 offshore Funds of Hedge Funds are domiciled and/or administered in Luxembourg, corresponding to EUR 52 655 million (USD 71 111 m), respectively EUR 57 040 million (USD 77 033 m) of assets under administration.
Regulatory background
The CSSF Circular of 1991 allows, among other things, the launch of products applying alternative investment strategies: extensive use of derivatives, short selling, leverage through borrowings, real estate investments, venture capital Funds and Funds of Hedge Funds.
To simplify the rules applicable to Luxembourg-domiciled Hedge Funds and to clarify the main investment restrictions applicable to short selling, leverage and derivatives, the Regulator issued at the end of 2002, CSSF Circular 02/80 on investment Funds using alternative investment strategies. This Circular is applicable to regulated Hedge Funds and open to all investors. Retail Investors can invest in such Non-UCITS products. This has helped to significantly reduce the time needed to approve new products.
Furthermore, a new vehicle has become available since the law on Specialised Investment Fund (SIF) entered into force on February 13, 2007. This law further reduces the time to market as no pre-approval from the Regulator is needed before launching the Fund.
How PwC Luxembourg can help you
With the help of our highly qualified and experienced professionals in Luxembourg and the network of fund specialists throughout the world, PricewaterhouseCoopers offers:
- Assistance with the set-up and establishment of Hedge Funds through regulatory, tax and operational advices, the optimization of fund and management company tax set-up, advices in local and cross-border outsourcing and regarding fund consolidation
- Assurance of Hedge Funds through statutory audits and long form reports, SAS 70 and AIMR-GIPS certification
- Performance improvement advisory to the fund, compliance and AML system selection and implementation, benchmark and cost optimization, financial risk management, research, and training through our dedicated entity, PwC ACADEMY
