A Reserved Alternative Investment Fund (RAIF) is a Luxembourg investment fund structure that does not require direct CSSF authorisation but must be managed by an authorised external Alternative Investment Fund Manager (AIFM) regulated under AIFMD. It combines the operational flexibility and speed of an unregulated vehicle with access to the EU's AIFMD marketing passport.
The RAIF is the fastest Luxembourg fund structure to launch: because the fund itself requires no regulatory approval (only the AIFM must be authorised), time to market is typically eight to twelve weeks from documentation to first close.
How it works
The RAIF was introduced by Luxembourg law on 23 July 2016 and has become one of the most widely used structures for European alternative fund formation. Its key design principle is to relocate the regulatory burden from the fund level to the manager level. The CSSF (Commission de Surveillance du Secteur Financier) does not approve or supervise the RAIF directly; it supervises the AIFM. Provided the AIFM is regulated and compliant, the RAIF can be established, invest, and distribute to professional investors without fund-level regulatory approval.
Eligible investors: RAIFs are restricted to "well-informed investors," defined under Luxembourg law as institutional investors, professional investors within the meaning of MiFID II, and investors who confirm in writing that they are well-informed and invest a minimum of EUR 125,000 (or have obtained an assessment of their expertise from a credit institution, investment firm, or management company).
Investment restrictions: RAIFs are permitted to invest in any type of assets (subject to risk-spreading requirements) unless they elect to invest under the SICAR regime (see SICAR glossary entry), in which case they focus on risk capital. RAIFs that do not elect the SICAR regime must comply with risk-diversification requirements, which in practice require at least some diversification of exposures rather than investment in a single asset.
Legal form: A RAIF can take multiple legal forms, including the Société en Commandite Spéciale (SCSp, the Luxembourg limited partnership equivalent), the Société en Commandite par Actions (SCA), or the Société Anonyme (SA). The SCSp is the most common form for private equity and private credit RAIFs because it mirrors the Anglo-American limited partnership model that international LPs are familiar with.
Umbrella structures: A RAIF can be structured as an umbrella fund with multiple sub-funds, each with its own investment policy, investor base, and currency, enabling a fund manager to run multiple strategies or vintages under a single legal structure.
For fund administrators, the RAIF presents a relatively streamlined onboarding process compared to CSSF-regulated vehicles (such as the SIF), because there is no fund-level approval process requiring CSSF documentation submission and review. However, the RAIF requires engagement with an authorised AIFM (which may be a third-party AIFM if the manager itself is not EU-regulated), and the administrator must ensure that ongoing AIFMD reporting obligations (AIFMD Annex IV reporting to the CSSF) are discharged by the AIFM.
Worked example
Northfield Capital Partners, a UK-based private equity manager post-Brexit, wishes to raise a EUR 250 million buyout fund targeting European institutional investors. It requires an EU-domiciled vehicle to access the AIFMD marketing passport for distribution to European LPs.
Northfield engages a Luxembourg third-party AIFM and appoints a Luxembourg fund administrator and depositary. The RAIF is structured as a Luxembourg SCSp, with Northfield's Luxembourg entity acting as the general partner.
The SCSp RAIF is incorporated, the fund rules are drafted (no CSSF approval required for the RAIF itself, only notification), and the fund administrator sets up the fund's ABOR and LP onboarding process. Time from decision to first close: nine weeks.
Capital calls are processed under Luxembourg law governing the SCSp, with payment instructions validated through Swelv's payment infrastructure and distributed to LPs using verified counterparty account details. The fund administrator prepares AIFMD Annex IV reports on behalf of the AIFM for submission to the CSSF.
Frequently asked questions
What is the difference between a RAIF and a SIF in Luxembourg? A SIF (Specialised Investment Fund) is a CSSF-regulated fund that requires CSSF approval before it can be launched and operate. The approval process can take three to six months. A RAIF is not CSSF-regulated at the fund level; it can be launched without CSSF approval because the regulatory oversight is exercised at the AIFM level. The trade-off is that a RAIF must always have an authorised external AIFM; a SIF can in principle use an internally managed structure. For most new fund launches seeking speed to market, the RAIF is preferred over the SIF.
Can a RAIF be marketed to retail investors? No. A RAIF is restricted to well-informed investors as defined under Luxembourg law. It cannot be marketed to retail investors. For retail-accessible fund structures in Luxembourg, managers must look to UCITS or the European Long-Term Investment Fund (ELTIF) framework.
Does a RAIF need a Luxembourg depositary? Yes. Under AIFMD, all AIFs managed by an authorised AIFM must appoint a depositary. For a Luxembourg RAIF, the depositary must be a Luxembourg-regulated entity (typically a bank or other authorised depositary institution). The depositary is responsible for custody of the fund's assets, cash flow monitoring, and oversight of the AIFM's compliance with the fund rules and AIFMD.
Is a RAIF subject to Luxembourg tax? The standard RAIF is subject to the annual subscription tax (taxe d'abonnement) of 0.01% of net assets per annum. Certain categories of RAIF may qualify for exemption from the subscription tax, including RAIFs invested exclusively in money market instruments, RAIFs that invest in other RAIFs or UCIs already subject to the tax, and RAIFs targeting specific investor categories. Tax treatment should be confirmed with a Luxembourg tax adviser.
What is the minimum investment for a RAIF? The minimum initial investment for a well-informed investor who does not qualify as an institutional or professional investor is EUR 125,000. Institutional investors and professional investors within the meaning of MiFID II are not subject to a minimum investment requirement. The fund's constitutive documents may impose a higher minimum investment.
Related terms
SCSp (Luxembourg), SIF (Luxembourg), SICAR (Luxembourg), QIAIF (Ireland), AIFMD and capital calls, ELTIF / ELTIF 2.0
Related pages
Luxembourg fund structures for private credit and private equity, Swelv for Luxembourg fund administrators