Agefi Luxembourg - mars 2026

AGEFI Luxembourg 32 Mars 2026 Fonds d’investissement By Dr. Sebastiaan Niels HOOGHIEMSTRA, Loyens&Loeff Luxembourg * O n 19December 2025, theCSSF issuedCircular 25/901 (the “Cir- cular”), amajor overhaul thatmo- dernizes, clarifies and simplifies rules for all CSSF-regulated investment funds (“Regulated Funds”), inclu- ding SIFs, SICARs andPart 2UCIs. It repeals long-standing circulars, renders others inapplicable, and in- troduces a general glossary to streamline communicationwith theCSSF.While primarily targe- ting SIFs, SICARs andPart 2UCIs, theCircular is also (partly) relevant for RAIFs. This piece focuses on the newrequi- rements and their impact on the democrati- zation of alternatives for Part 2UCIs. Investment limits&Risk-based investor categorization TheCircularadoptsarisk-basedframeworkdividing investors into three tiers: professional,well-informed, and unsophisticated retail investors. Well-informed investors enjoy flexibility similar to professionals, while retail investors remain under stricter rules em- phasizing diversification. The more experienced the investor, the greater the scope for tailored strategies; thelesssophisticated,thestrongerthesafeguards.The CSSFretainstheauthoritytograntderogationsorim- pose additional restrictions basedona fund’s specific investment policy, ensuring oversight remains dy- namic andproportionate. InvestmentlimitsforUnsophisticatedRetailInvestors TheCSSFapplies strict risk-spreading rules toPart 2 UCIsmarketedtounsophisticatedretailinvestors,as a general principle, no single exposure should ex- ceed 25% of the fund’s assets or commitments to avoid disproportionate risk. This applies to compa- nies, UCIs, other investment vehicles, or any type of asset, and includes short positions in securities from the same issuer. There are carve-outs for securities issued or guaranteed by OECDMember States, EU institutions, or supranational bodies, reflecting their lower risk profile. Thesame25%thresholdalsoapplieswheninvesting in another fund or investment vehicle in accordance with the sales document of the latter or the laws and regulations applicable to it. In that case, the CSSF takesapragmaticapproach.Ifthetargetfundalready applies diversification rules that are comparable or stricter, the regulator is comfortable that risk is suffi- cientlyspreadattheunderlyinglevel.Inthatcase,the concentrationlimitmaybelessrestrictive,withoutaf- fecting any separate risk-management obligations that apply under the AIFMD. The rule also covers “other assets” such as real estate or alternatives, fo- cusingoneconomicsubstanceratherthanlegalform. Assetsthatarecloselylinkedandonlymakesenseto- gether from a commercial perspective are treated as a single exposure. Several properties forming one economic project, for example, would be viewed as one asset rather thanmany. For derivatives, comparable diversification of under- lyingassetsisrequired,andcounterpartyriskmustbe limited if uncleared or uncollateralized. When using intermediary vehicles, limits apply to underlying in- vestments, not thevehicle itself. Infrastructure invest- mentsareanexception:upto50%ofthefund’sassets or commitmentsmay be allocated to a single project. Investmentlimitsforwell-informedandprofessional investors TheCSSFrisk-spreadingrulesapplyinasimilarman- nertoPart2UCIsthataremarketedtowell-informed andprofessional investors. However, the investment limits aremademore flexible for these types of Part 2 UCIs. A 50% limit applies on the assets or commit- mentsofaPart2UCIpersingleissuer,entityandasset. An exception applies to infrastructure investments, where up to 70% of fund’s assets or commitments maybeallocatedtoasingleproject,eitherthroughdi- rect acquisitionor exposure. Investment LimitsDuring Ramp-Up andWind-Down TheCircularacknowledgesthatstrictinvestmentlim- its may not always be practical throughout a fund’s entire life cycle. To address this, the sales document candefine specificperiodsduringwhich these limits eitherdonotyetapplyornolongerapply.Atthestart of a fund’s life, a ramp-up period may be provided toallowsufficienttimefororderlyportfolioconstruc- tion without forcing premature diversification. This periodmust be clearly defined and alignedwith the fund’s investment policy and asset class. For Part 2 UCIs investing inUCITS-eligible assets, the Circular generally limits the ramp-up phase to nomore than 12monthsfromlaunch.Forfundsfocusedonprivate investments,wherenegotiations,duediligence,struc- turing, and closing require longer lead times, the ramp-up periodmay extend up to four years. Any further extension is permittedonly inex- ceptional, well-justified cases and requires prior CSSF approval, with an additional pe- riod typically capped at one year. In all cases, the duration must remain reasonable and pro- portionate to the stated investment strategy. TheCircularalsoaddressesthewind- down phase at the end of a fund’s life.Forfundstargetingprivatein- vestments, the sales document may allow investment limits to cease during this period, reflect- ing the reality that portfolio con- centration can temporarily increaseasassetsarerealizedand positions exited without neces- sarily raising risk inappropriately. Throughout ramp-up and wind-down phases, the fundmust avoid excessive risks or unmanaged con- flicts of interest. Any available cash may be invested temporarily, but only in accordance with the provi- sions of the sales document. Efficient PortfolioManagement Techniques The Circular confirms that Part 2 UCIs may use effi- cientportfoliomanagementtechniques,suchasrepos, securities lendingor borrowing, andsimilar arrange- ments to optimize portfoliomanagement. The use of these techniques must serve the best interests of in- vestors.Theycannotalterthefund’sstatedinvestment objective or introduce risks beyond those disclosed. Their purpose is to improve execution, not reshape the fund’s riskprofile. The Circular also requires these techniques to make economicsense.Theirusemusteithergenerateprofit orachieveaclearobjective,suchasreducingrisk,low- ering costs, or creating additional capital or income. Approaches that add complexitywithout benefit fall outside the regulator’s expectations. Risk control re- mains central. Collateral receivedmust bediversified in linewith the fund’s owndiversificationprinciples, avoiding concentration in a fewissuers or assets. The Circular addresses counterparty risk. Exposures to counterparties that are neither cleared through a clearing institution nor adequately mitigated by col- lateral,suchasapledgeortransferofownership,must becarefullylimited.Inassessingtheselimits,thefund must take into account the counterparty’s quality, creditworthiness,andoverallqualification.Theobjec- tive is to ensure that operational efficiency does not come at the expense of hidden or excessive counter- party exposure. Borrowing andLeverage Part2UCIs(andSIFs)mayborrowcashtofinancein- vestments,manageliquidity,coverexpenses,ormeet redemption requests, and can pledge assets as secu- rity. The Circular does not prohibit leverage as such, but it draws a clear distinctionbetween investor cate- gories when it comes to howmuch leverage is con- sidered appropriate. For funds marketed to unsophisticatedretailinvestors,borrowingforinvest- ment purposes should generally not exceed 70% of assets or commitments. This cap reflects the CSSF’s view that leverage amplifies risk and should remain limitedforlessexperiencedinvestors.Bycontrast,Part 2UCIs reserved forwell-informedor professional in- vestors face no fixed borrowing limit. These funds mustdefinetheirownmaximumlevelbasedonstrat- egy,riskprofile,andinvestorsophistication,recogniz- ingthatexperiencedinvestorscanassessleveragerisk. Not all short-term financing counts as borrowing. Bridge facilities fully covered by capital commit- ments are excluded, as they manage timing mis- matches rather than increase exposure. Similarly, debtinstrumentswhosereturnsdependonportfolio performance are not treated as borrowing, as they function more like participation than traditional leverage. These rules complement existing leverage frameworks, including AIFMD where applicable. The Circular’s message is clear: leverage is allowed and often essential, but it must be proportionate to investor sophistication, transparentlydisclosed, and properlymeasured. TransparencyRequirements WithoutprejudicetotheArticle23AIFMDdisclosure requirements and, if applicable, any requirements in relation toRegulation2017/1129, theCircular clarifies thatcertaininformationinthesalesdocumentationof Part 2 UCIs shall be included in the Part 2 UCIs sales documentation. Investment Policy andRiskDisclosure Thesalesdocumentmustclearlyoutlinethefund’sin- vestment policy, including objectives, strategies, ex- pectedportfoliocomposition,permittedassetclasses, investment limits (and calculationmethod), and any use of intermediary vehicles. It should also disclose associated risks and potential conflicts of interest. Fundsinvestinginlessliquidassetsmustexplainhow temporary cash holdings will be managed in more liquid instruments. If the fund plans to invest in other undertakings for collective investment (UCIs) or similar vehicles, this must be explicitly stated. For offerings to unsophisti- cated retail investors where more than 25% of assets (or commitments) will go into a single target vehicle, thedocumentmustconfirmthatequivalentorstricter risk-spreading rules apply at the target level (in line withitsowndocumentationorapplicablelaws).Ifthe target is not supervised by or registered with an au- thority that cooperates with the CSSF, this must be clearly disclosed, together with the resulting risk im- plications. Investments invehicles linked to the same initiator/manager require full disclosure of any extra fees or charges. IfinvestinginotherUCIsorsimilarvehicles,thismust be stated explicitly. For offerings to unsophisticated retailinvestorswheremorethan25%ofassetsorcom- mitmentsgointoasingletargetvehicle,thesalesdoc- umentation must confirm that equivalent or stricter risk-spreadingrulesapplyatthetargetlevel.Ifthetar- getisnotsupervisedbyanauthoritycooperatingwith theCSSF,thismustbeclearlydisclosed,togetherwith theresultingriskimplications.Investmentsinvehicles linked to the same initiator or manager require full disclosure of any additional fees. Useofportfoliomanagementtechniques(e.g.,securi- ties lending, repos) must be described, including transaction types, conditions, limits, reinvestment of cash collateral, and inherent risks. These disclosures complement SFTR requirements for AIFs managed by authorizedAIFMs. Finally, explain howproceeds fromasset disposalswill be distributed to investors. Redemptions and Subscriptions Salesdocumentsmustclearlysetoutsubscriptionand redemption terms. When redemptions are allowed, specify the frequency, notice and settlement periods, any applicable limits, andprovide a concise explana- tion of liquidity tools and how orders are processed. If unexecuted orders roll forward, indicate whether they receivepriorityandwhichNAVapplies. Pricing dates depend on redemption frequency, which should align with the fund’s investment policy. Pri- vate investments may justify less frequent redemp- tions, andsubscriptionandredemptioncyclesdonot need tomatch. Borrowing If borrowing is permitted, the sales document must state the maximum borrowing limit, in compliance with the regulatory cap. Other Information If a fund or compartment is marketed to unsophisti- cated retail investors and allocates a significant share of its portfolio to private investments, the sales docu- ment must include clear, prominent warnings about the nature of the investment and, where relevant, its liquidityrisks.Thedocumentshouldalsooutlinepro- cedures for amending the investment policy or other material changes affecting the fundor compartment. Where applicable, itmust specify the prior notice pe- riod during which investors are offered a free-of- charge redemption opportunity. Finally, theCircular allowsRegulatedFundstoextendthelifeofafundor compartmentbyoneyearatatime,uptoamaximum of three extensions. ELTIF-Labeled Funds: SimplifiedRules andNoOverlap To avoid overlapping requirements, the Circular ex- cludes funds or compartments authorizedasELTIFs. For Part 2 UCIs, this means that applying the ELTIF label removes any duplication: diversification limits, ramp-up and wind-down rules, borrowing, invest- menttechniquesanddisclosureobligationsunderthe Circulardonotapply.ELTIF-labeledPart2UCIsmar- keted to professionals face no diversification or con- centrationrestrictionsundereitherregime,whilethose marketed to retail investors follow only the ELTIF framework. The same principle applies to SIF-like RAIFs with an ELTIF label. For SICAR-like RAIFs with an ELTIF label, the Circular does not apply, but their tax status still hinges onmeeting risk capital cri- teria. Ultimately, Luxembourg’s alignment with EU laweliminatesduplicativelocalrulesandreinforcesa modern, streamlined framework. GrandfatheringRegime TheCircular applies to SIFs, SICARs andPart 2UCIs and their compartments, except those qualifying as ELTIFs, MMFs, EuVECAs or EuSEFs, or open- and closed-endedfundsauthorizedbytheCSSFbefore19 December 2025. Funds that are grandfathered are only subject to theCircular on a voluntary basis. Outlook: TheCircular - a Boost for Retailization, Part 2UCIs, RAIFs&ELTIFs Luxembourgkeepsinnovating,adaptingandsimpli- fying its fund toolbox. Circular 25/901 is part of this modernization wave: after the 2023 overhaul intro- ducing the SCA for Part 2UCIs and the 2025 e-Iden- tification procedure that streamlined approvals and time-to-market, the Circular now streamlines out- dated rules and applies them proportionally based on investor type, i.e. unsophisticated, well-informed or professional. Diversification limits aremore flexi- ble, overlapswithEU labels like ELTIF are removed, and sponsors gain room to structure retail, HNWI and professional funds under a fair and responsive framework. With Part 2 UCIs converging with SIFs, the case for newSIFs is fading. Inparticular, as Part 2 UCIs are now largely subject to the same require- ments and can be used for unsophisticated retail, well-informed and professional investors, whereas SIF are only open towell-informed and professional investors. Yet, the CSSF continues to balance speed, proportionality andmarket needs. (*) Dr. Sebastiaan Hooghiemstra is a senior associate in the invest- ment management practice group of Loyens & Loeff Luxembourg and canbecontactedatSebastiaan.Hooghiemstra@loyensloeff.com. Luxembourg Elevates Part 2 UCIs, Reinforces PrivateWealth Strategies M algré les risques géopolitiques, les marchés actions devraient poursuivre leur progression, selon DWS. Le directeur des investisse- ments, Vincenzo Vedda, estime que les fondamentaux économiques devraient continuer à soutenir les performances boursières dans les mois à venir. UneescaladeauMoyen-Orientpourraitsemblerpeu propice à un scénario optimiste pour les marchés de capitaux.Pourtant,selonVedda,cettesituationn’altère pas la vision positive de l’établissement. Si l’attaque contre l’Iran a ravivé les incertitudes géopolitiques et économiques, elle ne remet pas en cause les princi- pauxmoteurs desmarchés actions. Pour Vedda, les perspectives reposent sur une crois- sance économiquemodérée à robuste et un environ- nement de taux favorable. Dans les économies déve- loppées, la croissance des bénéfices des entreprises devrait se situer entre6%et 12%. Lesmarchés émer- gents pourraient faire mieux, avec une progression des bénéfices pouvant atteindre 20%. Du côté des taux d’intérêt, Vedda ne voit pas de fac- teurssusceptiblesdepeserfortementsurlesmarchés. Le risque de voir les rendements des bons duTrésor américainàdixansdépasserdurablement4,5%reste limité. Il insiste sur unprincipe clé : ladiversification, essentielle dans un environnement incertain. Les perspectives liées à l’intelligence artificielle demeurent positives, même si des surprises néga- tives ne peuvent être exclues. Au début de l’année, les interrogations sur l’IA ont provoqué une rota- tion sectorielle sur les marchés actions, influençant aussi les préférences géographiques de DWS. Actuellement, Vedda privilégie les marchés d’ac- tions européens et japonais par rapport aumarché américain. Selon lui, cesmarchés sontmoins domi- nés par les valeurs technologiques et affichent encoreunedécotepar rapport auxÉtats-Unis, diffé- rence qui pourrait se réduire à mesure que les investisseurs diversifient leur portefeuille. Malgré cette vision positive, le CIO de DWS rap- pelle que l’environnement reste fragile. Les tensions géopolitiques continuent de créer une instabilité pouvant affecter la croissance économique et les marchés financiers. La hausse des prix de l’énergie pourrait peser sur l’Europe et l’Allemagne. Par ailleurs, un dollar américain plus fort pourrait freiner la reprise attendue dans les marchés émer- gents. Dans ce contexte, conclut Vedda, les mar- chés actions disposent encore de solides soutiens, mais les investisseurs devront rester attentifs à l’évolution des risques géopolitiques et macroéco- nomiques. Les marchés actions résistent aux tensions ©Freepik