Despite a tough economic backdrop, Luxembourg’s Reserved Alternative Investment Fund (Raif) market kept expanding in 2024. Data analysis by Investment Officer shows that overall new fund registrations rose steadily, even as sub-fund launches—a stronger gauge of market momentum—lost steam. Still, insiders downplayed signs of weakness.
“As the Luxembourg fund landscape evolves to facilitate the democratisation of [private] markets, with growing traction among a range of vehicles including Eltifs, UCI part II funds and SCSPs, the Raif remains a highly appealing structure for new fund launches,” said Pascal Dufour, Carne Group’s chief strategy officer.
When looking at data on new Raif launches, this is a clear trend, with monthly fund launches rising about 30 per month in early 2024 to as high as 50 toward the year-end.
Source: Investment Officer, based on Luxembourg Business Registers data.
Strongly positive take
Pascal Pech, head of business development/real assets Luxembourg at Hauck Aufhäuser Lampe Private bank AG echoed this strongly positive take:
“The steady rise in Raif umbrella registrations signals ongoing confidence in Luxembourg’s investment framework,” he said. “The increase in umbrella structures suggests sustained interest from asset managers who appreciate the vehicle’s ability to accommodate multiple investment strategies under a single legal entity.”
Pech, however, acknowledged the less encouraging element in the data. Mixed Raif and sub-fund launches fell from about 45 per month early in the year to just about 40 towards the end. A distinct downward slope is visible in a line of best fit for the monthly data points.
Cautious deployment
“The slight decline in new sub-fund launches reflects a more cautious deployment of capital,” Pech ventured. “This trend is particularly evident in the real estate sector, which faced headwinds throughout 2024,” he continued. “Rising interest rates, persistent inflationary pressures, and geopolitical uncertainties have weighed on real estate valuations and liquidity, prompting investors to reassess their risk exposure.”
Source: Investment Officer, based on CSSF data.
The European real estate market, which Pech described as “traditionally a key driver of alternative fund growth”, has seen reduced transaction volumes, which has led to “a slowdown in fund launches and capital commitments.”
Speaking on behalf of Pictet Asset Management, Aurélien Favier, head of legal team in charge of alternative funds, commented based on our results that “the fund raising environment has been generally more difficult in 2024 than previous year, this could result in less funds being established and launched.”
Carne tops both rankings
Based on Luxembourg Business Register data covering only Raif registrations (excluding sub-funds), the top firms of the year started with Carne Global Fund Managers (Luxembourg) S.A. with 17 Raifs, followed closely by ONE Fund Management S.A. with 16. Third place for the year, Raif-wise, goes to Waystone Management Company (Lux) S.A.
Turning to the view provided in the CSSF dataset that Investment Officer examined, which includes data on Raifs and their sub-funds, Carne came in first again, with 53 Raifs or sub-funds, edging out by some distance FundRock LIS S.A., at 33 and Waystone Management Company (Lux) S.A. at 21.
The alternative asset classes are going through a “period of recalibration,” according to Pech. “Fund managers refining their strategies to align with shifting macroeconomic conditions and investor preferences,” he explained, pointing to several indicators, including “more stable demand” from alternative asset classes including private equity and private debt. He added that “regulatory developments and sustainability considerations have also played a role, with ESG integration becoming an essential factor.
Robust demand
Carne’s Dufour remains entirely optimistic about the Raif market’s future. “In 2024, we saw robust demand among our clients for new Raif registrations, including interest in private market semi-open-ended fund structures, and we expect this demand to remain strong in the year ahead as asset managers continue to seize the growth opportunity in private markets.”
Waystone’s Alexandra Serban-Liebsch, head of business operations – continental Europe, explained that Raifs are only one solution. “While the Raif is a preferred vehicle for many well-informed investors due to its flexibility and speed to market, there are several other vehicles that cater to similar investor profiles, each offering unique advantages depending on the specific needs of the project.”
Serban-Liebsch highlighted limited partnerships (SCS/SCSp) as an unregulated option “highly favoured for their tax transparency and operational flexibility. She also pointed to specialized investment funds (SIFs), a CSSF-regulated vehicle which “appeals to investors seeking an added layer of regulatory protection.”
Growing competition
Favier from Pictet AM was more explicit: “Raif is in competition with SCSp (société en commandité spéciale) as the vehicle of choice for international [general partners] willing to set-up their funds in Luxembourg.”
He added that the Raif law is over eight years old, meaning that the first funds set up will reach the liquidation/end of lifecycle stage.
Further reading on Investment Officer:
- ‘Raif structures now surpass specialised investment funds’
- High rates, sub-funds keep Raif registrations in check
- AIFMs increasingly prefer sub-funds over new Raifs