To our readers: this article is the fourth instalment in our series marking the 10th anniversary of Raif.
Raif is often portrayed as an unregulated investment vehicle. An interpretation that 
In theory, any alternative fund manager authorised by the CSSF may act as an alternative investment fund manager (AIFM) for a Raif.
In practice, the underlying market trend – initially driven by smaller managers and then gradually adopted on a much wider scale – is the outsourcing of AIFM functions to third-party ManCos.
Setting up and maintaining an in-house authorised structure represents a considerable investment: qualified staff, a risk management framework, regulatory compliance, and regular reporting to the supervisor.
Third-party ManCos meet this need. As independent entities authorised by the CSSF, they make their licence and infrastructure available to multiple fund managers, thereby pooling costs and expertise. The fund manager pays a service fee and focuses on its core business: investing and managing relationships with its investors.
The outsourcing model for ManCos has followed the same path as fund management did 25 years ago. Initially, it was seen as something of a novelty. Today, it has become the industry standard.
The profile of midfielders
At Carne Group, Raif’s client base has historically comprised a very specific profile: neither the smallest players nor the very largest global giants. Francis Parisis refers to them as ‘midfield players’: rapidly growing mid-sized asset managers who need a robust regulatory framework to access European institutional investors, but who lack the time or resources to build their own infrastructure.
In practice, the definition of ‘mid-sized’ varies across markets and geographical regions, but historically it has covered firms with assets under management ranging from around €50m to €100bn. “These are growing firms that need regulated vehicles to expand more easily and do not necessarily have the time to build their own infrastructure,” explains Francis Parisis.
These managers are looking for two things: the regulatory credibility provided by an authorised AIFM and the speed of execution that an external ManCo already up and running can offer. Raif meets precisely these two needs. What has changed more recently, according to Carne Group, is the growing interest among managers of over €100 billion in assets in third-party ManCos, against a backdrop of increased competition and growing complexity in private markets.
Time-to-market … and its blind spot
The appeal of the ManCo-Raif combination is often summed up by the well-known ‘time-to-market’ argument. Once the ManCo has been authorised and is operational, the launch of a new Raif no longer requires prior approval from the CSSF. The constitutional documents simply need to be certified by a notary and then published in the Mémorial. Legal structuring, opening accounts, and documentation: it all takes just a few weeks.
However, Francis Parisis highlights a blind spot that is effectively slowing down this process. The real bottleneck is no longer regulatory: it is the process of opening bank accounts for the GP and/or the fund. In Luxembourg, this step takes on average between six and eight weeks, which significantly reduces the competitive advantage of time-to-market.
“It’s inefficient for a financial centre of this calibre; banks would be well advised to invest in speeding up these processes for their clients.”
Our core business is risk management. We need to understand the risks we take, document them and manage them. This isn’t bureaucracy; it’s a dynamic process.
Much more than just an AIFM licence
For Carne Group, the value proposition is not simply about providing an AIFM licence.
It is based on a much broader outsourcing model. Long regarded as mere back-office or middle-office service providers, ManCos are now seen as strategic platforms capable of handling the full range of regulatory complexities: compliance, risk management, regulatory reporting, internal audit and back-office operations.
“The outsourcing model for asset management companies is following the same path as fund management did 25 years ago. At first, it was seen as a novelty. Today, it has become the industry standard.”
The economic rationale is based on economies of scale. A mid-sized asset manager needs a compliance officer, a risk manager and so on, but rarely on a full-time basis. By outsourcing these functions to a ManCo, which pools them across several clients, the asset manager gains access to high-level expertise at a fraction of the cost.
This approach now enables Carne Group to manage up to €162bn in assets in Luxembourg within the Raif scope, and approximately €200bn when including non-Raif activities, with 90 staff in Luxembourg and 70 in Ireland.
Market concentration
The market for third-party ManCos has become highly concentrated. Carne Group, FundRock, Waystone and Universal Investment now share a significant share of the Raif market. Francis Parisis accepts this concentration, including its paradoxes.
On the one hand, it simplifies the regulator’s work: rather than supervising hundreds of scattered players, the CSSF focuses its oversight on a few major platforms that aggregate significant volumes of funds.
On the other hand, any concentration of power creates risks. Carne’s response involves a continuous strengthening of governance: internal audit, integrated risk management, a two-tier external audit system, and ongoing supervision of business processes.
“Our core business is risk management. We need to understand the risks we take, document them and manage them. This isn’t bureaucracy; it’s a dynamic process.”
It is quite possible to run organisations employing several hundred people with perhaps half the workforce.
Dublin and Luxembourg: two specialisations
With offices in both Dublin and Luxembourg, Carne Group has a unique vantage point over Europe’s two major fund hubs. Francis Parisis’s verdict is clear: this is not a war, but a matter of specialisation.
Dublin leads the way in liquid products: ETFs, credit funds and liquid strategies. Luxembourg has established itself as a leader in private assets: private equity, private debt, infrastructure and real estate.
In fact, a single manager can easily structure deals in both jurisdictions simultaneously, depending on their strategies. For Carne, the real competition does not come from Malta, Cyprus or Gibraltar, but from the major European domestic markets. France, Germany and Spain are gradually developing their own national vehicles in order to capture flows that have historically been structured in Luxembourg.
Artificial intelligence and growth
Looking ahead to 2030, Francis Parisis is cautiously optimistic. The sector is expected to continue growing by 5 to 8 per cent a year. For well-positioned third-party ManCos, he believes growth could exceed 10 per cent a year.
Two factors are driving this trend: the acceleration of outsourcing and the efficiency gains brought about by artificial intelligence. AI is no longer seen merely as a technological issue, but as a genuine structural competitive advantage: the automation of low-value-added tasks, cost reduction, and the ability to serve more customers with fewer resources.
“It is quite possible to run organisations employing several hundred people with perhaps half the workforce.” This prospect says as much about the future of ManCos as it does about that of Raif itself: an ecosystem that is becoming more concentrated and professionalised, and is now focusing on efficiency to remain competitive in the face of an ever-increasing number of alternative organisational structures.
Having explored the central role of AIFMs in the vehicle ecosystem, the final episode of the series will give listeners the chance to share their views on how the Raif has evolved over the last decade.
