Did you know?
For decades, US asset managers have viewed Luxembourg as a natural bridge into Europe, attracted by its stable and competitive tax environment, cross‑border‑oriented regulatory framework, and operational flexibility that accommodates multi-jurisdictional fund structuring, making it the launch point for many of the world’s largest US promoters.
Luxembourg remains exceptionally well positioned: its adaptability, regulatory flexibility and openness to innovation allow this transition to be translated into a genuine growth opportunity for US firms.
The biggest risk for US managers today isn’t regulation, it’s using Luxembourg the way they did ten years ago with obsolete information.
What does it mean for US fund managers?
The industry is entering a new phase shaped by reforms and structural shifts, which are redefining how global managers design their European operations, and so redefining Luxembourg’s appeal for international asset managers, especially for US firms, by broadening investor base, enhancing tax efficiency, facilitating cross‑border scaling of private assets and credit strategies, and opening the door to evolving product wrappers (from ETFs[1] to ELTIFs[2]) and technologies, like tokenization.
Same engine, same driver but with new rules, new shortcuts and fewer obstacles, performance changes dramatically.
Put simply, regulations such as AIFMD II[3] and ELTIF II make it easier to reach more investors without changing the strategy; for example, by removing the minimum entry ticket to retail investors and by providing clearer liquidity rules for open-ended AIFs [4] They allow managers to open strategies to a broader audience — including retail investors — with clearer rules on liquidity and fewer structural constraints.
For US managers, this means scaling faster across Europe, access to larger and more diverse pools of capital, and simpler cross‑border distribution, all through a single Luxembourg platform, supported by clearer supervision and smoother passporting.
Sounds good in theory, but what does it change in practice?
· Tax efficiency, with room for innovation Building on the existing attractive double‑tax treaty network, recent measures (such as Luxembourg’s carried‑interest reform and the investment tax credit) reinforce Luxembourg’s ability to deliver tax‑efficient fund structures while actively supporting innovation.
· A more flexible and competitive ETF framework ETF reforms make it easier and more cost‑effective to launch and operate products in Luxembourg. These include subscription tax exemptions, reduced disclosure requirements, the removal of contribution‑in‑kind audit obligations, and the option to establish ETFs as share classes within existing funds, further strengthen Luxembourg’s attractiveness for US issuers.
· Tokenization moving from concept to execution
Tokenized fund units are no longer theoretical. They bring tangible benefits such as operational efficiency, faster transferability, and access to new distribution channels.
Note: Luxembourg’s clear regulatory stance on distributed ledger technology (DLT) based fund issuance provides the certainty that many other jurisdictions still lack. And with retail funds now able, under defined conditions, to gain crypto exposure, US managers can design strategies for both professional and retail investors that blend private markets, digital assets, and traditional asset classes.
Luxembourg and the US share a long‑standing and successful partnership, now reinforced by recent regulatory developments. For US managers, Luxembourg is no longer just the gateway to Europe, it has become a genuine growth engine.
And many US managers haven’t fully caught up yet
This is exactly what we’ll unpack at the ALFI US Roadshow, where I’ll be joining fund managers in Chicago (12 May) and New York (14 May) to go deeper into what scaling in Europe really looks like today.
You may want to look at EY’s Beyond market entry - Luxembourg as the growth engine for US investment platforms | EY Luxembourg
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[1] Exchange‑Traded Fund – an investment fund traded on a stock exchange, similar to a listed security, typically tracking an index or specific strategy. ETFs are valued for their liquidity, transparency and cost efficiency
[2] European Long‑Term Investment Fund Regulation II – the updated EU regime designed to facilitate investment in long‑term assets such as private equity, private debt and infrastructure. The revised framework removes minimum investment thresholds for retail investors and introduces greater flexibility in fund structuring and liquidity.
[3] Alternative Investment Fund Managers Directive
[4] Alternative Investment Fund