Democratisation of private funds

The democratisation of funds refers to the trend of making alternative investment strategies more accessible to investors beyond professionals and institutions. It aims to break down barriers and provide opportunities for individuals to invest and grow their wealth by seeking exposure to a diversified range of strategies.

Luxembourg and Elvinger Hoss Prussen have played an instrumental role in structuring investment products that are accessible to retail investors, through the use of new European products like the ELTIF, or through Luxembourg structures such as the undertaking for collective investment setup under part II of the Law of 2010, which permit the setup of funds in which investors from the public can also invest.

Our clients

Our firm advises a large of number of clients in structuring investment vehicles that can be offered to retail investors. Typical clients include sponsors from the United States and EEA jurisdictions such as France, Spain and Italy, with the purpose of making their investment capabilities available to retail investors in order to increase their asset base and maximise their client exposure.

Our services

Structuring a private fund refers to the process of arranging the most suitable legal and operational framework under Luxembourg law for an alternative investment fund, in alignment with the marketing objectives of each client. This could consist in:

• Structuring an ELTIF (European Long Term Investment Fund), which benefits from the possibility of acquiring a retail passport
• Structuring other types of Luxembourg alternative investment funds, usually managed by a fully authorised alternative investment fund manager, which can acquire a passport to target investors such as investment banks or family offices indirectly exposed to retail investors, and/or facilitating local registration in certain EEA countries and beyond

Our team can assist you with the key steps involved in structuring private funds, including:

• Assisting with the approval process by the Luxembourg regulator
• Defining clear, actionable fund objectives tailored to specific needs
• Selecting the most suitable and strategically aligned legal structure
• Establishing a comprehensive governance and management framework
• Drafting and negotiating distribution agreements
• Navigating the compliance and regulatory landscape while safeguarding client interests
• Supporting fundraising endeavours while fostering robust investor relations.

This requires careful consideration of legal, regulatory and operational matters to create a framework that meets the fund’s objectives, the investors’ needs and the regulator’s requirements. Collaboration with legal advisors and distributors both inside and outside of Luxembourg is required to establish a well-structured and compliant investment vehicle.