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

How the Grand Duchy became the leading European domicile for alternative investments - and why public funds in infrastructure, private equity and private debt are almost inevitably set up there today.

Time to read8 min.

updated at06/10/2026

CategoryFund strategy

A sign with the inscription “Commerz Real” hangs on a wall in a modern, bright building.

Loading component...

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 1.6 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

Asset classes: From securities funds to the full spectrum of private markets

For a long time, Luxembourg was primarily known for UCITS - i.e. classic securities funds aimed at private investors. Since the 2008/2009 financial crisis and the subsequent AIFM Directive, the picture has changed fundamentally. The net assets managed by Alternative Investment Fund Managers (AIFMs) in Luxembourg have grown by around 30 per cent in recent years and amount to around 950 billion euros according to recent surveys.⁷

All relevant asset classes of the private markets are covered:

Private equity - investments in unlisted companies, classic growth, buyout and venture capital.
Real Estate - direct and indirect investments in residential, office, logistics and specialty real estate.
Private debt - credit and financing solutions outside the banking system.
Infrastructure - energy and utility networks, transport, digital infrastructure, social infrastructure.
hedge funds and other market-neutral strategies.

This growth is driven by the continued demand from institutional investors for diversification beyond equities and bonds, the volatility of public markets - and since ELTIF 2.0, increasingly also the desire of retail investors to gain access to long-term tangible asset strategies.

Loading component...

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

Loading component...

Practical example: klimaVest - the largest ELTIF on the German market¹

A look at Commerz Real’s klimaVest ELTIF shows that Luxembourg is the first choice for ELTIFs. Launched in 2020 - even before ELTIF 2.0 - as the first open-ended renewable energy fund for private investors in Germany, klimaVest has since reached a fund volume of more than 1.6 billion euros and is thus today the largest ELTIF on the German market. The portfolio includes 43 wind and solar power plants in 6 (excluding Luxembourg) EU countries as well as grid infrastructure since May 2025 - including an indirect stake in the German transmission system operator Amprion and thus around 11,000 kilometres of high-voltage grid. klimaVest is domiciled in Luxembourg and managed by Commerz Real Fund Management S.à r.l. - proof that the fund location not only offers regulatory benefits, but also provides the right framework for future-proof infrastructure strategies.

infravest - the infrastructure counterpart of Commerz Real for semi-professional and institutional investors - also uses Luxembourg as the fund’s domicile. Both products thus benefit from the dense service provider ecosystem, the CSSF’s rapid approval practice and the location’s international sales capability.

Loading component...

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

Loading component...

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.

Loading component...

¹Largest ELTIF / Market Leader in Germany: Scope ELTIF Study 2026, “Successful Mass Launch – Overview of the ELTIF Market 2025/2026,” as of December 31, 2025, published March 26, 2026, pages 2 and 9.

²Eis Financial Center – Facts & Figures: Over 5 trillion euros in fund assets, 3,669 funds and 14,712 sub-funds, distribution in 77 countries, 58% market share in cross-border investment funds. https://www.eisfinanzplaz.lu/de/view/daten-fakten/

³Luxembourg for Finance: Reference to the 1988 UCITS implementation and the resulting first-mover advantage. https://www.luxembourgforfinance.com/de/der-finanzplatz/investmentfonds/

⁴VP Bank: “Luxembourg – A Success Story as a Fund Hub,” July 2023. https://www.vpbank.com/de/news/2023/luxemburg-eine-erfolgsstory-als-fondsstandort

⁵ EY Luxembourg: “Alternative Investments and Luxembourg – A Long-Standing Success Story.” https://www.ey.com/en_lu/insights/private-equity/alternative-investments-und-luxemburg-eine-langjaehrige-erfolg

⁶EY Luxembourg, ibid. SICAR Law of 2004, SIF Law of 2007, AIFM Implementation of 2013, RAIF Regime of 2016; demographic composition comprising 48% non-citizens and 170 represented nationalities.

⁷VP Bank, a.a.O.; EY Luxembourg, a.a.O. Die genauen AIF-Volumina schwanken je nach Stichtag zwischen rund 843 Mrd. Euro (EY) und rund 950 Mrd. Euro (VP Bank, Stand Q4 2022).

⁸TAXGATE: “The Luxembourg RAIF from a German Tax Perspective.” https://taxgate.com/der-luxemburger-raif-aus-deutscher-steuerlicher-sicht/

⁹INTREAL: “It will take some time for ELTIFs to gain traction.” Market trends through the end of 2023 (95 ELTIFs, €13.6 billion in volume) and Scope’s forecast for the ELTIF market through the end of 2026. https://www.intreal.com/de/media/intreal-news/gut-eltif-will-weile-haben/

¹⁰Aiqunited / Mein Geld Investor Magazine: Overview of the ELTIF 2.0 Regulation, effective January 10, 2024. https://aiqunited.com/de/editorial/eltif-2-0-neue-chancen-fuer-langfristige-investitionen-in-europa/

¹¹Scope Fund Analysis, as cited in Private Banking Magazine: “Eltif Market: Record Year Expected with More Than 82 New Issues” (November 2025). https://www.private-banking-magazin.de/eltif-markt-2025-rekordjahr-scope-umfrage/

¹²Universal Investment: “Alternative investments in German markets are gaining momentum.” https://www.universal-investment.com/de/Aktuelles/topnews/universal-spotlight/Alternatives-nehmen-Fahrt-auf/

¹³Cash: “J.P. Morgan AM: Alternatives are a key component of any portfolio.” https://www.cash-online.de/a/j-p-morgan-am-alternatives-sind-ein-baustein-fuer-jedes-portfolio-717799/

¹⁴ Commerz Real / G20 Global Infrastructure Outlook: Investment needs in Germany: €1.3 trillion by 2040; in Europe: €13 trillion. https://commerzreal.com/de/presse/commerz-real-startet-infrastrukturfonds/ Data as of May 2026. Market data is subject to change.

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

Loading component...

A small country, a big location

The pillars of success

Asset classes: From securities funds to the full spectrum of private markets

Loading component...

Vehicle: Overview of the most important fund structures

The ELTIF: Private investor access to private markets

Loading component...

Practical example: klimaVest - the largest ELTIF on the German market1

Loading component...

Why Luxembourg - and not Germany?

Loading component...

Retailing as a megatrend

Loading component...

Outlook

Loading component...

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

Asset classes: From securities funds to the full spectrum of private markets

Vehicle: Overview of the most important fund structures

The ELTIF: Private investor access to private markets

Practical example: klimaVest - the largest ELTIF on the German market1

Why Luxembourg - and not Germany?

Retailing as a megatrend

Outlook

Contact person(s)

Practical example: klimaVest - the largest ELTIF on the German market¹

Practical example: klimaVest - the largest ELTIF on the German market¹