Third-party AIFMs in Luxembourg

A third-party AIFM, or alternative investment fund manager, is an authorised manager appointed from outside the sponsor’s group. The sponsor, which initiates the fund, arranges the AIFM’s appointment for regulated management without transferring every fund function to one provider.

The right model depends on the fund’s legal form and regime, the assets managed, the countries where investors are based and who makes investment decisions. A reserved alternative investment fund, or RAIF, requires an authorised external AIFM. A plain SCSp, or special limited partnership, may have other routes if the statutory conditions are met.

The AIFM role

The AIFM is responsible for the functions assigned by the framework for alternative investment funds (AIFs). Its main tasks are portfolio management, meaning management of the investments, and risk management. Its duties also cover valuation, delegation, conflicts of interest, investor information and regulatory reporting.

A third-party platform reviews the fund before accepting the mandate. The strategy, target assets, valuation policy, investors, delegated work and service providers must fit the activities that the manager is authorised and equipped to carry out. Leverage, which increases investment exposure through borrowing or other arrangements, must also fit that authorised organisation. The same requirement applies to liquidity, meaning access to cash when needed.

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 both the documents and the way the sponsor, general partner, administrator and depositary exchange information.

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 involves fewer regulatory duties and does not provide the full AIFMD passport. This passport allows cross-border fund management and marketing to professional investors under the Alternative Investment Fund Managers Directive, subject to its conditions.

An authorised AIFM follows the full framework and can use the applicable management and marketing passport. A Luxembourg manager using the full regime must first obtain authorisation from the Commission de surveillance du secteur financier (CSSF), Luxembourg’s financial supervisor. Managers qualifying for registration or a statutory exemption follow the corresponding route. The application requirements appear in the CSSF authorisation procedure.

The AIFM regime guide examines these routes in more detail.

The RAIF requirement

The RAIF provides a clear distinction between external management and an independent platform. An external AIFM is legally separate from the fund but may belong to the sponsor’s group. A third-party appointment is therefore one way of meeting the requirement, not the only way. The consolidated RAIF Law requires an authorised external AIFM for an ordinary RAIF. A narrow exception concerns the supranational institutions and national central banks excluded from the AIFM Law, not commercial sponsors or registered managers.

The RAIF itself does not receive prior CSSF product approval. The authorised AIFM, depositary, approved statutory auditor and annual-report obligations provide the main controls required by the fund regime.

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. An adviser makes recommendations. A delegated portfolio manager can make decisions within the authority delegated to it.

Article 18 of the AIFM Law permits delegation subject to conditions. The AIFM must carefully select a delegate capable of doing the work. It must monitor the delegate throughout the appointment 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 acting as a delegate should therefore expect to report its work, answer questions and refer issues to the AIFM through agreed procedures. It cannot act independently of the platform’s controls.

Since 16 April 2026, Article 13(2a) also requires an AIFM managing a fund initiated by a third party to submit detailed explanations and evidence to the CSSF on conflicts arising from that relationship. The assessment must explain how conflicts are prevented. Where prevention is insufficient, it must explain how conflicts are identified, managed, monitored and disclosed when required. The sponsor relationship therefore forms part of the regulatory file.

Selection before final documents

The AIFM should be selected before the limited partnership agreement, which sets the partners’ rights and duties, is final. The same applies to the offering document, which explains the investment and its risks, and to the delegation arrangements. The AIFM’s review tests whether it can supervise the work described in the proposed documents.

The review normally covers investment and risk processes, valuation, conflicts, service providers, intended investors and markets, anti-money-laundering information and reporting. The required depth depends on the strategy and parties rather than a standard list unrelated to 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 item of information, 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 monitors cash, safeguards assets and carries out its oversight duties. The appointed managers exercise the SCSp’s management powers under the partnership agreement. The general partner (GP) holds those powers when it is also appointed manager. The AIFM manages and supervises the functions covered by its regulatory duties.

The CSSF’s current investment fund manager reporting guidance also requires the AIFM to assess and monitor how often it must file Annex IV reports, the regulatory reports on its funds and their risks. 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 frequency, conflicts and procedures for referring problems can change the working relationship. The treatment of special-purpose vehicles, which hold particular investments or carry out specific transactions, also matters. Co-investments, which allow investors to invest alongside the fund, need suitable arrangements too. The fund documents and mandate should reflect the selected model without leaving gaps between the sponsor and platform.