The latest Luxembourg Fund Governance Survey, conducted by PwC Luxembourg in partnership with the Luxembourg Institute of Directors (ILA), has revealed that while strides have been made in governance practices, significant disparities remain across regions and fund types. Especially Alternative Investment Funds, known as AIFs, need to make a bigger effort to comply with regulation, the survey’s authors said.
The report, unveiled at the ILA and PwC Annual Fund Day, underscores the need for continued reform to meet the evolving demands of regulators and investors.
The survey, based on input from 115 stakeholders across Super ManCos, Ucits ManCos, AIFMs, Ucits and AIFs, highlights progress in areas such as board independence and diversity. Independent directors now make up 41 percent of boards, compared with 39 percent in 2022, while the proportion of boards with at least one female member has risen to 26 percent. Boards also meet more frequently, averaging 10 to 11 meetings annually, reflecting a growing commitment to active oversight.
Uneven transparency standards
However, the survey’s conclusion points to persistent challenges, particularly in the implementation of transparency standards and the independence of board structures. Although conflict-of-interest management practices have improved—with 95 percent of UCITS boards and 78 percent of AIF boards maintaining registers—there remains room for further alignment.
“This suggests a need for more targeted efforts to foster awareness and promote active consideration of regulatory changes in these (AIF) boards.”
Disparities were evident in several key areas. For example, while larger fund structures, such as Super ManCos, demonstrated stronger adoption of governance frameworks, smaller Ucits ManCos and AIFMs lagged behind. The report notes smaller entities, mostly alternative investment funds, or AIFs, often face resource constraints, limiting their ability to implement robust compliance measures or diversify their boards.
Half of AIF boards have yet to review new requirements
“Specifically, AIF Boards show a notable gap in their engagement” with CSSF requirements, the survey report said, adding that 47 percent of these indicate they have yet to review the impact of regulations under CSSF Circular 24/856, which addresses operational and strategic requirements for ManCo’s. “This suggests a need for more targeted efforts to foster awareness and promote active consideration of regulatory changes in these boards.”
Similarly, governance practices were found to vary significantly by geographic focus, with cross-border funds generally achieving higher compliance levels compared to their domestically focused counterparts.
Transparency gaps persist as well, particularly around the implementation of real-time reporting and conflict-of-interest disclosures. While 95 percent of UCITS boards have established conflict-of-interest registers, a significant proportion of smaller AIF boards—22 percent—still operate without one, highlighting uneven progress across fund types. The survey also flagged that in many cases, documented policies are inconsistently enforced, undermining their effectiveness.
‘Robust’ governance seen in place
Nevertheless, Andrea Montresori, chairman of the ILA Fund Committee and Partner at PwC Luxembourg, underlined that the survey found “robust governance practices” in place at Luxembourg fund boards. “Amidst the 2024 election super-cycle and significant geopolitical shifts, Luxembourg’s fund industry shows strong governance practices.”
The survey also highlighted the growing importance of Environmental, Social, and Governance (ESG) considerations, with 65 percent of boards now including ESG in their mandates. Yet, challenges around integrating ESG strategies into broader business objectives persist. This is particularly pressing as funds navigate compliance with new regulatory frameworks, including the Digital Operational Resilience Act (DORA).
Against a backdrop of geopolitical instability and economic uncertainty, the findings underscore the role of governance in mitigating risks and capturing opportunities. The “super year” of elections and shifting global dynamics has amplified market volatility, adding urgency to the need for robust governance structures.
The Annual Fund Day, hosted on Thursday at PwC’s Crystal Park, drew over 150 industry stakeholders to discuss these challenges. Attendees explored emerging trends, from regulatory updates to market volatility, and exchanged strategies for navigating a complex landscape.
Fund board priorities for next 12-24 months
Source: PwC Fund Governance Survey 2025