In Luxembourg, a UCITS invests in transferable securities and other liquid assets—think listed shares and bonds, regulated money market instruments, units of eligible funds, cash, and financial derivatives for hedging or efficient portfolio management. Uncovered short selling, borrowing (beyond temporary limits), and precious metals are off the table. The CSSF authorizes and supervises UCITS under the Law of 17 December 2010, as amended by UCITS V, and money market UCITS must meet the EU Money Market Fund Regulation. This guide explains the rules in friendly, practical terms for sponsors and investors.
Luxembourg City anchors a dynamic fund ecosystem with ± 660,000 residents nationwide, strong talent in Kirchberg and Cloche d’Or, and seamless EU market access. Key business streets include Boulevard Royal (banks, law firms), Avenue John F. Kennedy (Kirchberg financial district), and Grand-Rue (city-centre services). Secondary hubs like Esch-sur-Alzette, Differdange, Dudelange, Ettelbruck, and Diekirch support operations and housing for growing teams. Real estate developers eye Belval and Gasperich for office and mixed-use projects as managers scale.
Planning a structure? See our guide to setting up a Luxembourg UCITS, compare Luxembourg fund structures, or explore holding options with SOPARFI and SPF. For feeder routes or alternatives, read our UCIs registration overview and our note on master-feeder structures.
What UCITS eligible assets are allowed in Luxembourg?
Let’s keep it simple and precise. Your UCITS can invest in:
- Transferable securities admitted to or traded on a regulated market or an equivalent market.
- Recently issued transferable securities that will be admitted within a set timeframe.
- Money market instruments that are liquid and subject to effective supervision.
- Units of other UCITS or eligible UCIs, subject to limits and disclosures.
- Financial derivative instruments (listed or OTC) for hedging or efficient management, with proper risk measurement and counterparty rules.
- Deposits and cash for ancillary liquidity.
These categories aim to keep daily NAVs reliable and redemptions smooth across market cycles.
What is explicitly not permitted for a UCITS in Luxembourg?
To protect investors, a few red lines apply:
- No uncovered short sales.
- No borrowing beyond temporary limits for liquidity management.
- No direct investment in precious metals or certificates representing them.
These guardrails keep leverage and liquidity in check.
Which laws set the UCITS rules in Luxembourg?
Here’s the core framework, with official references for your legal teams:
- Law of 17 December 2010 relating to undertakings for collective investment (as amended by UCITS V). See the CSSF consolidated page and PDF.
- Directive 2014/91/EU (“UCITS V”) on depositary, remuneration, and sanctions: EUR-Lex.
- Regulation (EU) 2017/1131 on money market funds (for UCITS with MMF features): EUR-Lex.
- CSSF UCIs regulatory framework and FAQs: CSSF overview and FAQ.
Luxembourg combines robust investor protection with efficient approvals to support cross-border distribution.
Which UCITS legal forms can I choose in Luxembourg?
Choose the wrapper that fits your governance style and investor base. You can set up a:
- FCP (fonds commun de placement) managed by a management company.
- SICAV (variable capital) or SICAF (fixed capital), which can be self-managed or appoint a management company.
Each can be a single fund or an umbrella with multiple compartments and multiple share classes, enabling clean strategy segmentation for distribution.
How does CSSF authorization and supervision work for UCITS?
Before launch, the CSSF authorizes your UCITS based on draft constitutional documents, prospectus, KIID/KID policy alignment, service provider agreements, and risk management. After approval, the fund is supervised through periodic reporting and event-driven notifications. Cross-border distribution uses the regulator-to-regulator UCITS passport.
Who are the essential UCITS service providers in Luxembourg?
Successful launches come from well-coordinated teams. You will typically appoint a management company (or be self-managed for a SICAV/F), a Luxembourg depositary (credit institution or eligible investment firm), central administration/transfer agent, portfolio manager, auditor, legal counsel, and distributors. Conducting officers must show good repute and appropriate experience for the UCITS strategy.
What are the minimum capital rules for UCITS in Luxembourg?
Capital starts lean and scales as you raise AUM. The key thresholds are summarized below.
| UCITS Legal Form | At Authorization | Within 6 Months |
|---|---|---|
| FCP (managed by ManCo) | Not less than EUR 1,250,000 (to be reached within 6 months) | ≥ EUR 1,250,000 |
| Self-managed SICAV/F | ≥ EUR 300,000 | ≥ EUR 1,250,000 |
These levels keep investor protection aligned with fund scale while giving promoters room to build momentum.
Do money market UCITS have extra requirements in Luxembourg?
Yes. If your fund aims to deliver MMF-style returns or principal preservation, it must comply with the EU Money Market Fund Regulation. Portfolio quality, WAM/WAL limits, liquidity buckets, and stress testing become part of daily discipline.
Can I build scalable distribution from Luxembourg?
Absolutely. UCITS is Europe’s retail passport. With Luxembourg’s seasoned service ecosystem and multilingual workforce, you can launch quickly and passport across the EEA. As you grow, umbrella compartments allow clean product additions without reinventing operations.
How to start – “Key Features & Benefits” in simple steps with Damalion
- Define the strategy and investor profile, including target markets and share classes.
- Pick the legal form (FCP, SICAV/F) and umbrella vs. single fund.
- Select your ManCo or confirm self-managed status, and agree on the risk framework.
- Appoint your Luxembourg depositary, central admin/Transfer Agent, auditor, and counsel.
- Draft the prospectus, KIID/KID approach, governance, and policies.
- File to CSSF and align launch timeline with distributors.
- Go-live, monitor risks, report on time, and scale compartments as demand grows.
Need help? Contact Damalion to coordinate your end-to-end UCITS setup.
FAQs on Luxembourg UCITS
1) What assets can a Luxembourg UCITS invest in?
A Luxembourg UCITS can invest in transferable securities, eligible money market instruments, units of UCITS or eligible UCIs, financial derivatives for hedging or efficient management, deposits, and cash.
2) What investments are not permitted for a Luxembourg UCITS?
Uncovered short sales, borrowing beyond temporary limits, and investments in precious metals or certificates representing them are not permitted.
3) Which law governs Luxembourg UCITS?
Luxembourg UCITS are governed by the Law of 17 December 2010, as amended by UCITS V.
4) Who authorizes and supervises UCITS in Luxembourg?
The Commission de Surveillance du Secteur Financier (CSSF) authorizes and supervises UCITS in Luxembourg.
5) What legal forms are available for a Luxembourg UCITS?
A Luxembourg UCITS may be set up as an FCP, a SICAV, or a SICAF, either as a single fund or an umbrella with multiple compartments.
6) Can a Luxembourg UCITS be self-managed?
A SICAV or SICAF may be self-managed, while an FCP must be managed by a management company.
7) What are the minimum capital requirements for UCITS?
An FCP must reach EUR 1,250,000 within six months of authorization, and a self-managed SICAV or SICAF needs at least EUR 300,000 at authorization and EUR 1,250,000 within six months.
8) Do money market UCITS face specific rules?
Yes, UCITS that operate as money market funds must comply with Regulation (EU) 2017/1131.
9) Are derivatives allowed in a Luxembourg UCITS?
Yes, derivatives are allowed for hedging or efficient portfolio management, subject to risk management and counterparty rules.
10) Can a UCITS hold cash and bank deposits?
Yes, UCITS may hold cash and eligible deposits as ancillary assets.
11) Is cross-border distribution available to Luxembourg UCITS?
Yes, Luxembourg UCITS benefit from regulator-to-regulator passporting across the EEA.
12) Who can act as a UCITS depositary in Luxembourg?
Eligible Luxembourg credit institutions or investment firms that meet legal requirements may act as UCITS depositaries.
13) What documents must a UCITS prepare?
A UCITS must prepare a prospectus, a Key Investor Information Document, an annual report, and a semi-annual report.
14) Can a UCITS create multiple share classes?
Yes, UCITS may create multiple share classes to match currency, fee, and distribution preferences.
15) Where can promoters find official UCITS rules?
Promoters can consult the CSSF website and EUR-Lex for the Law of 17 December 2010, UCITS V, and the Money Market Fund Regulation.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor | External links are ownership of their respective owners and do not imply any economic link or interest with Damalion corporation.
10 best things to do in Luxembourg during 24 hours business trip!
- Walk the Old Town and Fortifications
- Tour the National Museum of History and Art (MNHA)
- Ride the tram along Avenue John F. Kennedy in Kirchberg
- Peek at the Philharmonie Luxembourg
- See the European Court of Justice buildings
- Explore the Bock Casemates
- Stroll through Grund
- Coffee near Place Guillaume II
- Check Cloche d’Or business district
- Bike a short loop with vel’OH!
