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Setting up an Umbrella Fund in Luxembourg
This episode is also available as a blog post: https://10leaves.ae/publications/luxembourg/setting-up-an-umbrella-fund-in-luxembourg
What is an umbrella fund?
An umbrella fund is collective investment scheme that legally exists as a single entity but has several distinct compartments or sub-funds. These sub-funds may follow completely different investment policies and can have different investors for each compartment. Such sub-funds are treated as separate funds, with assets and liabilities being segregated and fund accounting also being done separately.
Luxembourg offers multiple fund structures with the flexibility of opting for supervision, lower requirements for diversification of assets and an option for passporting by appointing an AIFM.
Luxembourg also has a diverse ecosystem of existing funds and service providers, which makes it easier to rent a compartment or make a sub-fund of an existing umbrella fund. This is usually used by startup or first-time fund managers of smaller funds, due to the ease of setup and lower costs.
What are the advantages of setting up an umbrella fund in Luxembourg?
Luxembourg offers many advantages for the establishment of umbrella funds:
The first one being time-to-market.
1. Setting up an umbrella fund is a one-time process, with an incremental sub-procedure for each compartment.
a. The fund manager does not have to go through a separate setup process, nor re-negotiate terms with service providers, every single time.
2. Costs also play a big part here. An umbrella fund with multiple compartments costs much lesser than setting up distinct funds, especially for fund managers who wish to employee various strategies for specific investor groups.
3. The third is choice. Fund managers can choose the level of supervision they require, depending on the class of assets that the fund will invest in, and the kind of clients that the fund will market itself to. Accordingly, funds can be unsupervised (such as SLPs), supervised (such as SIFs) or attach themselves with a supervised AIFM (such as RAIFs).
4. A Luxembourg sub-structure offers comfort to investors, given the good reputation of the jurisdiction, the enhanced protections offered to investors and the existing network of globally-recognised service providers. Besides, this is a well-established practice, being tried and tested for many years.
5. Distribution options are also available. For instance, the umbrella and sub-funds could be passported on the basis of the UCITS or AIFMD framework.
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By 10 LeavesThis episode is also available as a blog post: https://10leaves.ae/publications/luxembourg/setting-up-an-umbrella-fund-in-luxembourg
What is an umbrella fund?
An umbrella fund is collective investment scheme that legally exists as a single entity but has several distinct compartments or sub-funds. These sub-funds may follow completely different investment policies and can have different investors for each compartment. Such sub-funds are treated as separate funds, with assets and liabilities being segregated and fund accounting also being done separately.
Luxembourg offers multiple fund structures with the flexibility of opting for supervision, lower requirements for diversification of assets and an option for passporting by appointing an AIFM.
Luxembourg also has a diverse ecosystem of existing funds and service providers, which makes it easier to rent a compartment or make a sub-fund of an existing umbrella fund. This is usually used by startup or first-time fund managers of smaller funds, due to the ease of setup and lower costs.
What are the advantages of setting up an umbrella fund in Luxembourg?
Luxembourg offers many advantages for the establishment of umbrella funds:
The first one being time-to-market.
1. Setting up an umbrella fund is a one-time process, with an incremental sub-procedure for each compartment.
a. The fund manager does not have to go through a separate setup process, nor re-negotiate terms with service providers, every single time.
2. Costs also play a big part here. An umbrella fund with multiple compartments costs much lesser than setting up distinct funds, especially for fund managers who wish to employee various strategies for specific investor groups.
3. The third is choice. Fund managers can choose the level of supervision they require, depending on the class of assets that the fund will invest in, and the kind of clients that the fund will market itself to. Accordingly, funds can be unsupervised (such as SLPs), supervised (such as SIFs) or attach themselves with a supervised AIFM (such as RAIFs).
4. A Luxembourg sub-structure offers comfort to investors, given the good reputation of the jurisdiction, the enhanced protections offered to investors and the existing network of globally-recognised service providers. Besides, this is a well-established practice, being tried and tested for many years.
5. Distribution options are also available. For instance, the umbrella and sub-funds could be passported on the basis of the UCITS or AIFMD framework.