Luxembourg Strengthens Its Position as Europe’s Premier Fund Domicile

Luxembourg is cementing its role as Europe’s leading fund domicile, driven by the powerful convergence of sustainable investment demand, private market growth, and ongoing regulatory reform. Sustainable funds remain a cornerstone of the jurisdiction’s appeal, with Luxembourg now home to over 34% of all European sustainable fund assets—solidifying its status as a top destination for ESG and impact-driven strategies.

The launch of ELTIF 2.0 has accelerated the retailisation of private markets, a trend gaining traction across the continent. In response, Luxembourg has adapted its fund ecosystem to better accommodate long-term, illiquid assets, particularly in the rapidly expanding private credit space. The Reserved Alternative Investment Fund (RAIF) structure has become the preferred vehicle for new alternative fund launches, offering regulatory flexibility and full alignment with the AIFMD framework.

At the same time, regulatory scrutiny has intensified—especially around sustainability disclosures under SFDR and CSRD—even as digitalisation continues to streamline operational workflows. The CSSF has enhanced fund approval processes, balancing efficiency with the growing complexity of investor and compliance expectations.

Looking ahead, Luxembourg’s ability to combine regulatory clarity, structural innovation, and investor protection will be critical to sustaining its competitive edge in both sustainable finance and private market strategies.

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