Registered office Luxembourg: From UCITS pioneer to tangible assets and ELTIF hub

Anyone wondering why we, as Commerz Real and klimaVest, are dealing with the Luxembourg financial centre can find a concrete answer in one sentence: klimaVest is at home there. The ELTIF (European Long-Term Investment Fund) klimaVest - today the largest ELTIF on the German market¹ with a fund volume of 1.8 billion euros - is managed by Commerz Real Fund Management S.à r.l. in Luxembourg. This is not a coincidence, but a conscious location decision: Luxembourg provides the regulatory framework, operational infrastructure and international sellability that a product like klimaVest needs to enable private investors across Europe to access investments in renewable energy and grid infrastructure. This article explains what this means in detail - and why Luxembourg is no alternative for tangible asset funds. 

A small country, a big location

Luxembourg is one of the smallest member states of the European Union in terms of area and population - but the second largest fund location in the world after the USA. More than 5 trillion euros of net assets are managed in Luxembourg investment vehicles, spread across 3,669 funds and 14,712 sub-funds.² Luxembourg funds are distributed in 77 countries, and 98 of the world’s 100 largest asset managers are active in the Grand Duchy.²

This position is not a coincidence, but the result of a strategy consistently pursued over four decades. When the EU established the framework for a European-wide public fund product with the UCITS Directive in 1985, Luxembourg was the first Member State to transpose this directive into national law in 1988.³ This first-mover advantage has resulted in a global brand: Luxembourg UCITS funds are now synonymous worldwide with regulatory quality and investor protection.⁴

The pillars of success

Behind the figures are framework conditions that have proven to be competitive over decades:

political and economic stability. Luxembourg is one of the few remaining AAA economies in the eurozone and has a pronounced culture of investor protection⁵ The Commission de Surveillance du Secteur Financier (CSSF) is regarded internationally as pragmatic, technically in-depth and responsive.

Regulatory responsiveness. While reforms in Germany regularly take years, legislative changes in Luxembourg are often implemented within a few months. Since the early 2000s, the Grand Duchy has consistently created new structures for alternative investments: the SICAR Law (2004) for risk capital, the SIF Law (2007) for specialised investment funds, the national implementation of the AIFM Directive (2013) and finally the Reserved Alternative Investment Fund (RAIF) regime in 2016.⁶

International workforce and a dense service provider ecosystem. 48 percent of the Luxembourg population are non-citizens, represented by around 170 nationalities.⁶ Auditing, tax law, legal advice and asset servicing form a specialist cluster that is unique in this density in Europe.

Cross-border sales. With a market share of 58 percent in cross-border investment funds, Luxembourg is the central hub for international fund distribution strategies.²

Vehicle: Overview of the most important fund structures

Luxembourg’s strength lies in the depth of its instrument box. Different vehicles are available depending on the group of investors, strategy and distribution channel:

• UCITS - the harmonised EU public fund product for transferable securities. Maximum investor protection, EU-wide sales passport, classic retail vehicle.
• SIF (Specialised Investment Fund) - regulated vehicle for institutional and well-informed investors suitable for most alternative strategies. Subject to approval by the CSSF.
• SICAR (Société d'investissement en capital à risque) - specially designed for investments in risk and venture capital.
• RAIF (Reserved Alternative Investment Fund) - the dominant vehicle for alternative investments in practice since 2016. The RAIF itself is not authorised by the CSSF but is supervised indirectly through the fully licenced AIFM. This significantly shortens the release time compared to a SIF, which can take several months to approve.⁸
• SICAV and SICAF are not separate fund categories, but legal forms that can be chosen within UCITS, SIF or RAIF - with variable or fixed capital, depending on whether ongoing subscription and redemption of shares are planned.
• ELTIF (European Long-Term Investment Fund) - not a Luxembourg vehicle in the narrower sense, but an EU-wide product regime that is based on national fund structures. It is worth taking a closer look at the ELTIF. 

The ELTIF: Private investor access to private markets

The ELTIF (European Long-Term Investment Fund) was launched by the EU in 2015 to mobilise long-term capital for the European real economy - with the explicit aim of opening up access to illiquid asset classes such as infrastructure, private equity and private debt to private investors as well. In practice, however, the first version fell short of expectations: By the end of 2023, only 95 ELTIFs had been launched across Europe with a total volume of EUR 13.6 billion.⁹

With the ELTIF 2.0 Regulation, which came into force on 10 January 2024, the picture has changed fundamentally. The reform eased key restrictions: The minimum investment amount of EUR 10,000 was eliminated, the proportion of eligible assets was increased, fund-of-funds structures were facilitated, and semi-liquid arrangements with periodic redemptions were explicitly provided for.¹⁰

The effect can be seen in the current market data. In the first three quarters of 2025 alone, at least 82 new ELTIFs were launched across Europe - significantly more than the 55 new issues of the entire previous year. ¹¹ With 44 new ELTIFs, Luxembourg is by far the most popular location, followed by France (24). In asset classes, private debt leads (36 products), followed by private equity (16) and infrastructure (13).¹¹ At least 35 of the new ELTIFs are designed as evergreen funds with no fixed maturity. Analysts expect the European ELTIF volume to rise to 30-35 billion euros by the end of 2026.⁹

For retail investors, this is a structural change: Investments in infrastructure, private equity or private debt - reserved almost exclusively for institutional investors and family offices for decades - become accessible via the ELTIF. However, these are not traditional public funds: Capital tied up over several years, minimum holding periods and limited redemption periods are the rule, and the risk horizon is significantly greater than that of traditional securities funds.

Why Luxembourg - and not Germany?

Anyone who wants to launch a tangible asset product for private investors that can be marketed across borders cannot go past Luxembourg in practice. Although the German legislator has created a structure for infrastructure investments in the public fund sector for the first time since 2024 with the infrastructure special fund pursuant to Section 260a KAGB, the planned Future Financing Act addresses further points. However, the structural differences remain significant:

• Leverage: Limited to 30 percent of the NAV for the German infrastructure special fund, whereas 60 percent is possible in Luxembourg in comparable structures.
• Share redemptions: In Germany, this is only planned twice a year; in Luxembourg, monthly redemption windows can be structured - as klimaVest practices with daily share redemption.
• Acquisitions of affiliated companies: Not permitted in Germany, but in Luxembourg - an essential factor for houses with grown platforms.
• Back-to-back financing, which is widespread and often necessary in alternative structures, is not permitted in Germany.

In addition, only two ELTIFs have so far been authorised by the BaFin in Germany, of which only one represents a semi-liquid structure - and this in a comparatively simple private equity fund-of-funds strategy.¹² There is actually no established management practice for more complex ELTIFs - such as those with infrastructure and energy investments such as klimaVest - in Germany.

There are also other tax-related points: the box privilege is at 100 per cent in Luxembourg, in Germany only at 95 per cent; reporting obligations and transfer pricing requirements are significantly leaner in Luxembourg; and the effective taxation tends to be lower.

Important for classification - and this is sometimes mixed up in the public debate: The decision of large asset managers for Luxembourg is not primarily a tax decision, but a location decision. It is about regulatory practice, international sales capability, the service provider ecosystem and the sheer speed with which structures can be built. International competitors such as BlackRock, Patrizia or J.P. Morgan rely on Luxembourg for the same reasons.¹³ 

Retailing as a megatrend

The term that is currently shaping the industry is retailization: the gradual opening of private markets to private investors. ELTIF 2.0 is the most prominent tool, but by far not the only one. The digitization of sales plays an equally important role: Digital platforms such as Trade Republic and Scalable Capital are named as the most important distribution channel for ELTIFs in the future by 40 percent of market participants in recent industry surveys.¹¹ 

The need is also tangible in relation to the real economy. In Germany alone, the need for investment in infrastructure by 2040 is estimated at around 1.3 billion euros, Europe-wide at 13 billion euros.¹⁴Even government initiatives such as the German special fund for infrastructure of 500 billion euros cover only a fraction of this. Private capital is not only welcome, but also structurally necessary.

Commerz Real addresses this need with two complementary products: klimaVest - the ELTIF for private investors that invests in renewable energies and grid infrastructure - and infravest, which targets semi-professional and institutional investors with a broader spectrum of infrastructure. Both funds are domiciled in Luxembourg and benefit directly from the location benefits described here.