The New 'RAIF': Reserved Alternative Investment Fund

The RAIF - a SIF'S DNA without the burden of regulatory approval

The RAIF is intended to be a flexible and efficient structure. Its regime is substantially based on the one applicable to the specialised investment fund (SIF). The RAIF will thus be subject to the well-informed investor and risk diversification requirements and will offer all the features of a SIF, including, amongst others:

The possibility to provide for ring-fenced sub-funds Multiple share classes Flexibility of distributions to investors The possibility to provide for redemption rights for investors As there are no limitations in terms of eligible assets, the RAIF may be used for all types of investment policies and strategies. In addition, it can be set up in the form of a corporate structure or contractual structure. Where a corporate structure is opted for, a large choice of corporate forms is available (such as the various Luxembourg partnership types).

The RAIF is particularly attractive as it capitalizes on the SIF's DNA but its creation, launch and amendments are not subject to the approval of the Luxembourg Financial Regulator (the Commission de Surveillance du Secteur Financier, CSSF). This feature will enable it to optimize the time to market, in an industry where time is often of the essence.

Tax wise, the RAIF will be subject to a subscription tax of 0.01% of the net asset value. Under certain circumstances the subscription tax may be nil.

Requirement to be managed by an authorised AIFM

The RAIF's absence of regulatory approval and supervision, which could potentially be perceived by investors as a lack of protection, is counterbalanced by the fact that it must be managed by an authorised Alternative Investment Fund Manager (AIFM) based either in Luxembourg or another EU Member State. This requirement ensures the RAIF's indirect supervision through the regulator of the AIFM's home Member State as well as its compliance with the requirements of the Alternative Investment Funds Managers Directive (AIFMD), such as the appointment of...