With the early implementation in 1988 of the UCITS Directive, Luxembourg is an historicalplayer in the development of pan-European retail funds. It rapidly emerged as a central hub for global fund products in mainstream and alternative asset classes.  During the last ten years Luxembourg experienced a solid growth in hedge funds and funds of hedge funds.  Real Estate funds have also gained considerable success in the market hosting structured real estate products targeting international investment and distribution. Finally, it became also a leading center for establishing Private Equity funds and associated special purpose vehicles.

The 1988 Law has been overhauled by the law of December 20, 2002 relating to Undertakings for collective Investments, which henceforth governs both the UCIs and UCITS regime.

UCITS (Generally called Part I funds because they are dealt in part 1 of the 2002 Law –and the original 1988 Law) can not only be sold to the public in Luxembourg, but also internationally, both in Europe and in many jurisdictions beyond, using the EU passport granted by the UCITS Directive.

“Part II” funds of the 2002 Law are, by definition, excluded from the UCITS regime.  They may be sold to both retail and institutional investors but subject to each country’s local distribution rules.  This exclusion results namely from the non compliance with the UCITS directive of their investment policy, their risk spreading, their financial leverage or because they are closed to redemptions.

Investment Funds may take the form of an open ended legal entity (SICAV), a closed ended legal entity (SICAF), or a contractual form which must have a management company (FCP). These different entities may create sub-funds, each with a different investment policy. The rights of investors and of creditors concerning a sub-fund or which have arisen in connection with the creation, operation or liquidation of a sub-fund are limited to the assets of that sub-fund (i.e. protected cell concept), unless a clause included in the constitutional documents provides otherwise.

In close cooperation with the law firm investment practice, VDBTRUST designs and incorporates UCIs whether they are formed under Part I or Part II of the Luxembourg law and active in any field of investments. We also incorporate management companies which either manage Part I FCPs or self-managed SICAVs or SICAFs.  Finally, we carry out all formalities necessary for transferring offshore funds to Luxembourg, and make them compliant with Luxembourg law.