To our readers: this article is the second instalment in our series marking the 10th anniversary of the Raif. Discover the origins of this vehicle through the eyes of Jacques Elvinger.
1983. Perhaps a good year for wine. But when 
Luxembourg has not sought to be the best jurisdiction for a particular strategy or type of investor. It has sought to be the best jurisdiction for everyone. It is this ‘one-stop-shop’ philosophy that has guided every legislative innovation. And it is this philosophy that has given rise to the Raif.
Over more than 40 years in practice, Jacques Elvinger has been involved in every stage of this development. The first Luxembourg Ucits with a European passport. The first authorised Ucits management company. The first Sicar. And finally, the Raif, the world’s first example of which was established by his firm on the very day the law of 23 July 2016 came into force. The documentation had been ready for weeks.
I have always been positive and optimistic about the development of the single market. We have managed to turn every European directive into an opportunity.
The directive that changed everything
The history of the AIFMD began with a European directive that no one had anticipated in this form. In 2009, the European Commission proposed regulations for hedge funds. What the industry received in 2011 was something radically different: the AIFMD, a directive that regulates not the funds themselves but their managers.
For Jacques Elvinger, this paradigm shift was initially met with some concern. “Initially, there was certainly a concern about the constraints involved. The AIFM Directive had a direct impact on non-Ucits management companies, Part II funds, FISs and Sicars, which until then had operated exclusively under Luxembourg regulations, without the constraints of European rules.”
Time would tell that the success of the UCITS label would be replicated with the FIA label.
The concern quickly dissipates. In this new context, Jacques Elvinger and his partners realise something crucial: nowhere does the directive require that the fund itself be supervised by a regulatory authority. It requires that its manager be supervised. Behind this legal nuance lies an opportunity. An opportunity that Luxembourg has been able to seize.
An idea is born in a meeting room
The origins of Raif were nothing like a revelation or a solitary ‘eureka’ moment. It was simply a group of lawyers sitting around a table, asking themselves the question that every strategist asks when faced with a new regulatory framework: what does this mean for us? How can we make the most of it?
“The idea of an AIF product not subject to CSSF supervision arose during internal discussions with my partners about the opportunities that the AIFM Directive might create,” says Jacques Elvinger. What emerged from these meetings was a simple yet highly effective observation: unregulated funds from the Cayman Islands and Delaware have conquered the global private equity market thanks to two advantages: flexibility and speed. Luxembourg, for its part, has an asset that these offshore jurisdictions lack: the European passport.
The concept behind Raif is precisely the combination of these two worlds. A fund not directly supervised by the CSSF, which allows for greater flexibility: time-to-market. A fund managed by an authorised AIFM that offers the European passport and regulatory credibility. “Combining this flexibility with the benefits of the European passport seemed to us to be an obvious opportunity for Luxembourg.”
A different approach to supervision: a regulatory turning point
To persuade the CSSF to accept a fund that was not directly supervised, Jacques Elvinger put forward a compelling argument that the regulator had no choice but to accept: “Not allowing this type of vehicle amounts to ‘gold plating’, an over-transposition of the European directive. Since the AIFMD did not require direct supervision of the fund, banning it in Luxembourg would have been more restrictive than what European law required.”
This legal argument convinced the authorities.
For decades, Luxembourg had built its reputation on a promise: funds that were supervised, regulated and protective. That was precisely what set Luxembourg products apart from offshore funds. “Introducing a fund product not regulated by the CSSF was an innovation that broke with Luxembourg’s brand image,” admits Jacques Elvinger.
It was therefore first necessary to demonstrate that this direct protection was not what the institutional and sophisticated investors targeted by the Raif needed. The government was convinced relatively quickly. The CSSF required more persuasion but eventually agreed. The Raif did not abolish supervision. It shifted it from the fund to the manager. This shift, which seems like a semantic detail, is in fact the cornerstone of the entire scheme.
Around two years passed between the initial internal discussions at Elvinger Hoss Prussen and the enactment of the law. Two years of drafting, consultations, roadshows and negotiations. Jacques Elvinger emphasises the collaborative nature of this work, a reflex that says a great deal about the culture of the firm.
Brexit, low interest rates, SCSp: the winning trio
When discussing the Raif’s success, it is essential to mention the external factors that drove it forward. Jacques Elvinger cites three factors that propelled the vehicle’s rise to greater heights than its creators had ever imagined.
SCSp first. The Special Limited Partnership, introduced at the same time as the transposition of the AIFMD, was the missing link for Anglo-Saxon asset managers. They had always operated within a GP/LP framework. The Special Limited Partnership has enabled them to operate in familiar territory in Luxembourg. “It is probably currently the most widely used vehicle in the private equity sector,” acknowledges Jacques Elvinger. Raif and SCSp are not competitors: they are the two driving forces behind the same revolution.
Brexit next. When the United Kingdom left the European Union, London-based fund managers lost their European passport. Many chose Luxembourg as the location for their European operations. “There are certainly negative aspects to Brexit, but in terms of the growth of alternative funds in Luxembourg, the country has clearly benefited from this situation,” says Jacques Elvinger.
Interest rates, at last. A decade of low interest rates has driven institutional investors towards alternative asset classes offering higher returns. Raif was there, ready and waiting, at just the right moment. Such a perfect alignment of circumstances is never entirely coincidental: the groundwork must first have been laid.
The Raif is just one element among many. Together with the SCSp, Brexit and the AIFMD, it is the entire toolkit that has enabled this boom.
What a decade of figures reveals
3,354 active Raifs were recorded as at 4 May 2026. Jacques Elvinger is not getting carried away by the excitement. He chooses his words carefully. “It is always difficult, if not impossible, to predict the figures in terms of numbers and assets under management.”
What satisfies him more than the figures is the proof that the model was sound. The decision made in 2013–2014 to combine the flexibility of offshore funds with the European passport was the right one. The Luxembourg financial centre has, once again, managed to turn a European regulatory constraint into a competitive advantage.
And the fact that other countries are now following suit? “I’m not surprised. In Luxembourg, too, we look at what’s being done in other jurisdictions to enhance our offering. But there’s no doubt that, in most cases, Luxembourg has been a pioneer rather than a follower.”
Legacy: agility as a necessity
The issue of legacy is the one that most clearly reveals Jacques Elvinger’s philosophy. He could have focused on the figures, on the track record. Instead, he chose to talk about something else: the approach, and what enables a financial centre to remain relevant decade after decade.
Three principles, which he sets out with a precision that speaks to their importance in his eyes.
“Not resting on our laurels; the danger of complacency, which is always present once success has been achieved. Effective collaboration between all stakeholders in the financial centre, including the authorities – this cooperation is what sets Luxembourg apart from other financial centres where regulators and the industry are more distant. And listening to clients and professionals, understanding what the market needs even before it has clearly articulated it.”
But a fourth principle is less obvious – the one closest to his heart: European regulation has provided Luxembourg with opportunities – the passport, credibility and the framework – but it has also reduced the country’s room for manoeuvre. In this context, the Grand Duchy’s capacity for innovation depends on its ability to identify precisely the areas where it remains free to act. “In all areas where we can retain flexibility, regardless of the European framework, that is where we must be proactive, swift and effective. We must always distinguish between what falls within a European framework and the other areas where we must continue to be swift in implementing new measures.”
This is perhaps Jacques Elvinger’s most valuable piece of advice to the next generation. A way of thinking: constantly seeking out the gaps where initiative is still possible, and acting swiftly, in coalition, before others think of it. The Raif is a perfect illustration of this. The AIFMD did not require direct supervision of the fund. Luxembourg spotted the gap and acted.
To our readers: having explored the origins of the vehicle with Jacques Elvinger, the next instalment will focus on one of its key strengths: its legal flexibility and structuring options.
