If you’re looking for opportunities to invest in Europe, Luxembourg has plenty to offer you. However, given the amount of financial products offered by trust companies in Luxembourg, you may feel a bit lost while sorting through all your options.
This article will give you a brief summary of 2 of the most popular investment funds available in the Grand Duchy.
European Long Term Investment Funds (ELTIF)
The European Long Term Investment Funds stem from the Europe 2020 Strategy that was announced by the European Commission back in 2010. ELTIFs aim at increasing the available capital dedicated to long-term investment in Europe.
These long-term projects come in a variety of forms such as infrastructures, small & medium companies or even real-estate (limited to social housing, schools, hospitals & the likes).
The European Commission hopes that it will provide new growth opportunities to the European market and allow for a "smart, sustainable and inclusive economy".
There are a number of eligibility rules regarding ELTIFs. Indeed, only European Union’s alternative investment funds that are managed by investment fund managers can present themselves as ELTIFs.
Consequently, in order to offer ELTIFs, an AIFM will have to comply with specific regulations.
ELTIFs are a hybrid concept between alternative investment fund managers and undertakings for collective investment in transferable securities (UCITS).
An extensive guide made by the AMF provides everything there is to know about ELTIFs funds.
Special Investment Fund (SIF)
A Special Investment Fund (SIF) is a type of Luxembourgish fund that was created in February 2007. It is dedicated to experienced investors.
The quality of experienced investor refers to institutional investors, professionals or any investor who agrees to be considered as such and is willing to invest at least 125,000 € in the fund.
SIFs are considered flexible funds as there is no constraint to what type of asset they can invest in. For instance, SIFs are able to invest in transferable securities, real estate, hedge funds or venture capital.
A Special Investment Fund also benefits from a lighter supervision from authorities. Nevertheless, they are expected to set up a system dedicated to monitor and manage risks, to diversify their investments and to be structured in a way that prevents conflict of interest.
Special Investment Fund must be authorized by the CSSF, the Luxembourg financial authority, before they can be sold as products.