The Reserved Alternative Investment Fund: Key features & advantages
The RAIF, or Reserved Alternative Investment Fund, is a Luxembourg product. It was launched in 2016 and is subject to AIFMD. 3 questions to Jean-Pierre Gomez, Head of Regulatory & Public Affairs, SGSS Luxembourg.
Why such a product? What are its main advantages?
AIFMD is a directive that regulates the managers of alternative investment funds and not the product itself, i.e. the AIF, or alternative investment fund. In other words, AIFMD grants managers a licence to create and manage alternative funds in any country in the European Union. The idea behind it was to offer a flexible alternative investment structure that can be set up quickly and, above all, positioned for competitive access to the European market for managers of alternative assets and AIFs located in third countries offering greater flexibility in terms of authorisation and supervision.
How does it work?
Firstly, it’s a regulated product. That is, RAIFs* are subject to the Luxembourg Law of 23 July 2016, even though RAIFs are not under the direct supervision of the CSSF, the competent authority in Luxembourg. So RAIFs do not need permission from the local authority to be established.
On the other hand, for a RAIF to be qualified as an AIF, under the AIFM Directive, on launch it must appoint a European manager who has this AIFM status. RAIFs operate on the principle of risk spreading when it comes to investment, with the option to create multiple compartments.
What is the situation with regards to the RAIF today?
It’s a huge success that benefits all “AIFM” managers looking for a competitive alternative product, and it offers the same advantages as any other AIF.
What’s more, RAIFs can be liquidated with lower costs. The number of RAIFs rose to 200 structures not long after the Law of 23 July 2016 came into force. Today, there are around 1,600 RAIFs according to the Luxembourg RCS (Trade and Companies Register). RAIFs are catching up with SIF structures (Special Investment Funds) as the ideal legal forms, especially for real estate funds.
SGSS offers RAIF administration and depositary services for AIFM managers based in EU countries.