Luxembourg: The gold standard for fund setup

Luxembourg has been a preferred domicile for asset managers for decades, but its dominance is due to much more than history.

The country has deliberately positioned itself as the gold standard for fund setup by combining regulatory innovation, strong investor safeguards, and seamless cross-border access.

At the heart of Luxembourg’s appeal is the Special Limited Partnership (SCSp).

This structure offers the flexibility of a partnership with the safeguards investors expect, but without the legal personality of a traditional company. That design makes it especially useful for private equity, venture capital, and hedge fund strategies. Managers can shape partnership agreements to fit the needs of institutional investors, all while staying in line with the Alternative Investment Fund Managers Directive (AIFMD).

Luxembourg’s framework also integrates seamlessly with global distribution. Its UCITS and AIF platforms give fund managers access to investors across the EU and beyond, providing reach that few other domiciles can match. At the same time, the Commission de Surveillance du Secteur Financier (CSSF) has established a reputation for striking a balance between robust oversight and pragmatic responsiveness; a combination highly valued by global fund sponsors.

Luxembourg’s broader ecosystem adds real weight to its appeal. Managers setting up funds there can tap into a deep pool of legal, advisory, and administration expertise. For investors, that kind of support translates into something just as valuable: confidence that their money is in a market built on strong governance and regulatory certainty.

Importantly, Luxembourg is also positioning itself at the forefront of sustainable finance. Fund structures like the RAIF give managers a way to launch quickly and flexibly, without stepping outside EU rules such as the Sustainable Finance Disclosure Regulation (SFDR). That balance of speed and oversight has helped Luxembourg carve out a leading role in ESG and impact investing. It allows managers to meet the rising demand for sustainability from global investors, while still offering the reassurance of strong regulatory standards.

As hedge funds and private funds continue to globalize, the question is no longer whether Luxembourg is a safe choice, but whether managers can afford to overlook it. In an era of heightened scrutiny, credibility has become a strategic asset  – and Luxembourg delivers it by design.