The Luxembourg government announced today the launch of a new type of alternative investment fund (AIF). This AIF is to be called "reserved alternative investment fund" (RAIF).
The RAIF's salient features are designed on the ones of the widely popular Luxembourg specialised investment fund (SIF). However, unlike the SIF, the RAIF will not need to be approved and supervised by the Luxembourg supervisory authority (CSSF).
Since the RAIF qualifies as an AIF it will have to be managed by an alternative investment fund manager (AIFM). Although the RAIF is itself not regulated, its AIFM will be subject to the supervision of the CSSF.
The RAIF has been created at the initiative of the Luxembourg investment fund community. Its aim is to reduce time-to-market for products designed only for sophisticated investors. Such investors do not necessarily require the protection and do not want to bear the additional costs of regulation at the level of both the product and its manager.
The RAIF will be of most use to established fund managers who already have a licensed AIFM, and should remove one of the current barriers that may deter such a manager from domiciling a new fund in Luxembourg.
A little patience will however be required as the RAIF will have to undergo the Luxembourg legislative process. We will make a more detailed note on the RAIF available shortly.