Choosing the right AIFM service provider in Luxembourg is a critical step for fund promoters, private equity managers, and family offices aiming to attract sophisticated investors across Europe. A fully licensed Alternative Investment Fund Manager (AIFM) not only ensures compliance with AIFMD regulations but also provides robust operational and risk management infrastructure.
Luxembourg remains the leading jurisdiction for cross-border fund structures, thanks to its strong regulatory framework and experienced service ecosystem. Family offices and institutional investors increasingly demand transparency, local substance, and high-quality reporting when selecting an AIFM.
Beyond regulatory compliance, the right AIFM partner can help enhance fundraising, improve governance, and strengthen investor trust globally. Selecting an AIFM is more than a compliance exercise—it is a strategic decision with long-term operational and reputational impacts.
Key evaluation criteria include CSSF licensing, asset class expertise, and the ability to support complex tax and structuring needs. Operational integration, technological capabilities, and investor communication standards are also crucial for today’s demanding investor base.
This comprehensive checklist helps you systematically assess and select the most suitable AIFM for your Luxembourg fund structure. Follow these ten essential steps to make an informed, strategic choice and position your fund for long-term success.
1️⃣ Regulatory Authorization & License
- Confirm the AIFM holds a full license from the CSSF (Luxembourg’s financial regulator).
- Verify up-to-date regulatory compliance and no recent sanctions or warnings.
- Check cross-border passporting capabilities if marketing in the EU under AIFMD.
2️⃣ Expertise & Track Record
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Assess their experience with your asset class (private equity, real estate, private debt, infrastructure, hedge, etc.).
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Request a list of funds currently under management and references.
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Evaluate their track record with launches, restructurings, and liquidations.
3️⃣ Substance & Local Presence
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Confirm presence of qualified local directors and senior management in Luxembourg.
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Check physical office location and on-the-ground operational capacity.
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Assess staffing levels relative to assets under management (AUM).
4️⃣ Risk Management & Compliance
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Review their risk management framework: market, liquidity, credit, operational risks.
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Evaluate compliance processes, including AML/CTF, KYC, and FATCA/CRS reporting.
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Ask about independent valuation oversight and conflict of interest policies.
5️⃣ Portfolio & Delegation Oversight
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Understand their model for portfolio management: in-house vs delegated.
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Check their ability to supervise delegated portfolio managers effectively.
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Confirm robust reporting and monitoring systems.
6️⃣ Reporting & Investor Relations
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Review quality and frequency of investor reporting (quarterly, monthly, tailored).
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Check capabilities for regulatory reports: AIFMD Annex IV, PRIIPs KIDs, etc.
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Evaluate transparency on fees, costs, and performance metrics.
7️⃣ Operational Support & Technology
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Assess fund administration integration (if also providing administration services).
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Evaluate IT systems for risk reporting, compliance monitoring, and investor portals.
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Check cybersecurity standards and data protection compliance.
8️⃣ Tax & Structuring Support
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Confirm experience with different fund vehicles (SIF, RAIF, SCSp, etc.).
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Evaluate ability to coordinate tax structuring and liaise with tax advisors.
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Verify knowledge on cross-border tax matters relevant to your investors.
9️⃣ Cost Structure & Fees
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Request a transparent fee schedule, including AIFM fees, setup costs, and ongoing charges.
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Understand variable fees tied to AUM, performance, or transaction volumes.
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Compare fees against service scope and value-added offerings.
1️⃣0️⃣Reputation & References
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Check client testimonials and peer reviews (from other GPs, LPs, or family offices).
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Evaluate their standing in the market and industry recognition.
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Request references from similar fund promoters or sponsors.
Additional Tips
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Consider an introductory meeting with their senior management and operational team.
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If working with a multi-jurisdictional strategy, confirm their international support network.
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Engage your legal counsel to review the AIFM agreement carefully.
Damalion Insight: The choice of AIFM is critical to the success of your Luxembourg structure and your investor trust. A comprehensive, documented due diligence process not only mitigates operational and compliance risks but also strengthens your positioning with sophisticated investors such as pension funds, family offices, and institutional LPs. Contact your Damalion expert now to access the right AIFM service expert for your investment fund.
