A third-party AIFM is an authorised manager appointed by a fund instead of a manager built within the sponsor’s own group. The appointment supplies a regulated management framework, but it does not transfer every fund function to one provider.
The right model depends on the fund wrapper, assets under management, investor geography and allocation of investment decisions. A RAIF requires an authorised external AIFM. A plain SCSp may have other routes if the statutory conditions are met.
The AIFM role
The AIFM is responsible for the functions assigned by the alternative investment fund framework. Portfolio management and risk management sit at its centre. Valuation, delegation, conflicts, disclosures and regulatory reporting also form part of the operating perimeter.
A third-party platform reviews the fund before accepting the mandate. The strategy, target assets, leverage, liquidity, valuation policy, investors, delegation model and provider chain must fit its authorised organisation.
The platform remains responsible throughout the mandate. It is therefore not a name added after the fund documents have been completed. Its review can change the wording and the actual information flows between the sponsor, general partner, administrator and depositary.
The registered and authorised routes
The consolidated AIFM Law provides a registered route for managers whose relevant portfolios do not exceed EUR 100 million including leverage. The threshold is EUR 500 million where the portfolios are unleveraged and have no redemption rights exercisable for 5 years after the initial investment in each AIF.
Those thresholds apply at manager level across the relevant AIFs. Registration has a narrower regulatory perimeter and does not provide the full AIFMD passport.
An authorised AIFM follows the full framework and can use the applicable management and marketing passport. Any Luxembourg company intending to act as an AIFM must obtain prior CSSF authorisation, as explained by the CSSF authorisation procedure.
| Route | Typical position | Main limit or consequence |
|---|---|---|
| Registered manager | Sub-threshold AIF perimeter | No full passport and not available for a RAIF |
| Third-party authorised AIFM | External authorised manager appointed by the fund | Platform governance and oversight apply |
| Own authorised AIFM | Sponsor maintains its own regulated manager | Separate authorisation, organisation and continuing supervision |
The AIFM regime guide examines these routes in more detail.
The RAIF requirement
The clearest mandatory case is the RAIF. The consolidated RAIF Law requires every RAIF to be managed by an authorised external AIFM within the eligible framework.
The RAIF itself does not receive prior CSSF product approval. The authorised AIFM, depositary, approved statutory auditor and annual-report obligations provide the main regulated control chain.
A plain SCSp can also appoint a third-party authorised AIFM. The need then comes from its AIF status, assets, marketing plan, investor expectations and desired management framework rather than from the SCSp legal form alone.
Delegation and sponsor involvement
The sponsor may remain involved as an investment adviser or delegated portfolio manager, depending on its status and the AIFM’s approved model. Advice and delegation are different arrangements because they allocate decision authority differently.
Article 18 of the AIFM Law permits delegation subject to conditions. The AIFM must select a capable delegate with due care, monitor it on an ongoing basis and retain the ability to give instructions or withdraw the delegation. Portfolio or risk management delegation also follows specific authorisation, supervision and conflicts requirements.
Delegation does not reduce the AIFM’s liability to the fund and investors. The AIFM must not delegate to the point that it can no longer be considered the manager. A sponsor operating under a delegated model should therefore expect documented reporting, challenge and escalation rather than independent action outside the platform’s control framework.
Selection before final documents
The AIFM should be selected before the limited partnership agreement, offering document and delegation structure are final. Its acceptance process tests whether the proposed legal drafting matches an operating model that the platform can supervise.
The review normally covers investment and risk processes, valuation, conflicts, service providers, investor and distribution perimeter, AML information and reporting. The required depth depends on the strategy and parties rather than a standard list detached from the fund.
Late selection can reopen documents because the AIFM’s responsibilities must appear consistently in the fund terms, mandate and provider agreements. The fund launch sequence explains those dependencies.
The continuing operating model
The mandate should state who prepares each input, who reviews it and who makes the final decision. Portfolio information, risk measures, valuations, breaches, investor reporting and regulatory filings move across several parties.
The administrator maintains the books and investor records allocated to it. The depositary performs its cash, safekeeping and oversight duties. The general partner retains vehicle-level powers under the partnership agreement. The AIFM manages and supervises within its regulated remit.
The CSSF’s current IFM reporting guidance also requires the AIFM to assess and monitor its Annex IV reporting frequency. The data used for that reporting should reconcile with the fund’s accounting and risk records.
Platform fit
A platform is suitable only if its authorised scope, strategies, delegation model and provider relationships fit the fund. The comparison should focus on the real allocation of responsibility rather than the existence of an authorisation alone.
Asset class experience, valuation approach, reporting cadence, conflicts, escalation and treatment of SPVs or co-investments can change the working relationship. The fund documents and mandate should reflect the selected model without leaving gaps between the sponsor and platform.
Conclusion
A third-party AIFM provides an external authorised management framework. It is mandatory for a RAIF and can also support other AIFs that need the full regime or passport. The appointment works only when delegation, oversight and provider responsibilities are defined before launch and maintained through the fund’s life.
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Frequently Asked Questions
Does every Luxembourg SCSp need a third-party AIFM?
No. A plain SCSp that is an AIF can use a registered sub-threshold manager where the statutory conditions are met and the full passport is not needed.
Does a RAIF need an authorised AIFM?
Yes. A RAIF must be managed by an authorised external AIFM established in an eligible jurisdiction under the RAIF framework.
Can portfolio management be delegated?
Yes, if the delegation conditions and the platform's operating model allow it. Delegation does not remove the AIFM's responsibility, ongoing monitoring duties or obligation to avoid becoming a letter-box entity.
When should the AIFM be selected?
Before the fund documents are final. The AIFM reviews the strategy, risk, valuation, delegation, conflicts, investor perimeter and service-provider model.
