What Is a Luxembourg RAIF? (With Fund Examples)

The Reserved Alternative Investment Fund has become one of Luxembourg's most popular structuring choices for alternative managers, particularly those who value speed to market. But "not regulated by the CSSF" does not mean "unregulated." Here's what that distinction means and why it matters.

The RAIF's defining feature is what it doesn't require CSSF product approval. Unlike a Part II UCI, a SIF or a SICAR - all of which must be authorised by the CSSF before launch, a RAIF can be brought to market without regulatory review of its documentation.

In practice, this can shave months off the launch timeline. Where a Part II fund authorisation might take three to six months, a RAIF can potentially launch in a matter of weeks once documentation is finalised and the AIFM is in place.

The flip side: because there is no CSSF product approval, the RAIF's offering document must clearly state on its cover page that the fund is not subject to CSSF supervision. The governance burden falls squarely on the AIFM and the fund's governing body.

RAIFs cannot be marketed to retail investors (unless the RAIF also obtains ELTIF status — see below). The fund is restricted to "well-informed investors" as defined in the RAIF Law. This includes institutional investors and MiFID professional investors by default, plus any other investor who meets one of two conditions: a minimum investment of €100,000, or certification from a bank, management company or AIFM confirming the investor's expertise and knowledge.

The €100,000 threshold was lowered from €125,000 by the Law of 21 July 2023, aligning it with the thresholds used for EuVECA and EuSEF. The same law also explicitly confirmed that RAIFs may be marketed in Luxembourg to investors who do not qualify as professional investors, provided they meet the well-informed investor criteria.

For cross-border distribution, a RAIF managed by an EU-authorised AIFM can use the AIFMD marketing passport to reach professional investors across the EEA. Reaching well-informed but non-professional investors in other jurisdictions requires compliance with local national private placement rules.

Under the general regime, a RAIF can invest in essentially any type of asset - private equity, real estate, infrastructure, private credit, fund-of-funds, secondaries, co-investments - subject to the principle of risk-spreading. The RAIF Law itself does not prescribe specific diversification limits, but the fund's AIFM and governing body are expected to look to CSSF guidance.

A RAIF may also elect the "Risk Capital" regime, in which case it must invest exclusively in risk capital. Under this regime, there are no risk-spreading requirements, but the tax treatment differs.

One increasingly important feature of the RAIF: it can apply for the ELTIF label. A RAIF that obtains ELTIF authorisation from the CSSF gains the EU-wide retail passport - despite being a RAIF at its structural core. However, the RAIF's own investor restriction still applies: investors must qualify as well-informed under the RAIF Law, even if they also qualify as retail under the ELTIF Regulation. In practice, this means the ELTIF-labelled RAIF can be marketed to retail investors across the EU, provided those investors also meet the well-informed threshold.

For managers who want the RAIF's operational flexibility and speed of set-up but also want access to the ELTIF's distribution passport, this hybrid approach is gaining traction, though the investor eligibility is still limited.

If the target investor base includes ordinary retail investors who cannot meet the well-informed criteria, the RAIF is the wrong tool. For that audience, a Part II UCI or a standalone ELTIF is more appropriate. Managers who are building for retail-oriented wealth platforms typically start with or convert to a Part II fund for exactly this reason.