Alternative investment fund manager

An authorized AIFM holds initial capital of at least 125,000 euros, or 300,000 euros for an internally managed AIF, plus additional own funds of 0.02 percent of the assets above 250 million euros. The manager keeps risk management separate from portfolio management, sets up a liquidity management system for each open-ended fund and reports positions, leverage and liquidity to its supervisor.

Each fund needs a written valuation policy, which decides how the net asset value is calculated. Each fund also needs a depositary that keeps the assets and checks the manager. The manager may delegate portfolio management or risk management to another firm, but it keeps the responsibility and may not hand over so much that it becomes a letter-box entity.

A manager below the thresholds of the AIFMD only registers with its supervisor. The thresholds are assets under management of 100 million euros including leverage, or 500 million euros for unleveraged funds that grant no redemption rights for five years. A registered manager follows national rules and cannot use the EU marketing passport, so many smaller managers either apply for full authorization or launch their funds with a third-party AIFM that already holds one.

The amending Directive (EU) 2024/927, known as AIFMD II, had to be transposed into national law by 16 April 2026. It sets rules for funds that originate loans, requires every open-ended AIF to select at least two liquidity management tools such as redemption gates, notice periods or swing pricing, and asks managers to report more detail on delegation. Luxembourg published its transposing law in March 2026, and the extended reporting duties apply from 16 April 2027.

Crypto funds in the EU are mostly alternative investment funds, because a UCITS may hold crypto-assets only indirectly and within narrow limits. An AIFM that adds crypto-assets to a fund updates its valuation policy, its risk management and its anti-money-laundering checks, and it organizes custody with the depositary and a crypto custodian. In Germany, open-ended special AIFs for professional and semi-professional investors may invest up to 20 percent of their assets in crypto-assets since the Fund Location Act of 2021.

In Luxembourg, a manager whose AIF invests more than 10 percent of its NAV in crypto-assets needs prior approval for the strategy Other-Other Fund-Crypto-assets under the CSSF FAQ on crypto-assets. The CSSF then asks for the updated risk and valuation policies, the experience of the portfolio manager and a description of who controls the cryptographic keys. Funds reserved to well-informed investors, such as a SIF or a RAIF, may hold more than the 10 percent that applies to AIFs open to retail investors. The vehicles for crypto funds in Luxembourg differ mainly in who may invest and who supervises them.

A mutual fund in the EU is usually a UCITS: it invests in liquid securities within fixed diversification limits, lets investors redeem at least twice a month and may be sold to retail investors across the EU. An alternative investment fund can hold illiquid assets such as private equity, real estate, loans or crypto-assets, can use more leverage and can restrict redemptions. Most AIFs are sold to professional investors, and retail distribution depends on national rules or on the European long-term investment fund label, ELTIF.

The supervisor of the home country authorizes and supervises the manager, which is BaFin in Germany, the CSSF in Luxembourg and the FMA in Austria. ESMA coordinates these supervisors and publishes guidelines, for example on liquidity stress testing in investment funds. A manager from outside the EU can market its funds in a member state through the national private placement regime of that state.