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Alternative Investment Funds: The View From Luxembourg

Alternative investment funds with exposure to private equity, real estate, infrastructure, and debt are gaining popularity in Luxembourg. Barbara Martin, head of Private Fund Sales EMEA, and Johannes Höring, head of AIFM, Fund Management, look at current market trends.

Luxembourg has many advantages as a financial center. It has a multilingual workforce, is economically stable, and has an established infrastructure of legal, tax, and financial professionals who can assist clients from a multitude of jurisdictions.

It is also a key location for innovative financial products, including alternative investment funds (AIFs). Corrections in equity prices and rising inflation are driving interest in AIFs around the world as investors search for new markets and sources of investment return.

Globally, the alternative investments market, which includes private equity, real estate, infrastructure, and private debt, is growing rapidly.

This growth has been particularly robust in Luxembourg. According to figures from the Association of the Luxembourg Fund Industry (ALFI), net assets of Luxembourg investment funds were 5.19 trillion euros ($5.62 trillion) on January 31, 2023. Investment in these funds has come from both retail and institutional investors, with economies of scale enabling managers to offer funds at lower costs, making them more attractive, according to the ALFI report.

The net assets of investment funds (UCITS and AIFs) domiciled in Europe totalled 21.9 trillion euros ($24.1 trillion) at the end of 2021, according to ALFI, with Luxembourg confirmed as the largest domicile.

Investors want to hedge against inflation

Investors are also taking stock of the 2022 correction in the equity markets, factoring in the rise of inflation, and trying to predict how continuing issues around global supply and demand will affect returns in the future. Indeed, investor appetite, particularly in commercial real estate and private debt, could function as an inflation hedge and we expect to see demand in these areas grow.

For example, consider infrastructure funds. These investments have much longer-term horizons, but this asset class has proven its resilience. It offers investors access to returns not necessarily correlated with equity markets.

For this reason, we expect to see more interest in these structures in 2023, as well as demand for real estate funds and evergreen funds as investors seek alternatives to equities and bonds.

As this sector grows so does demand for administrative expertise in this burgeoning product. It will take specialist knowledge to provide a comprehensive solution for fund administration requirements and secure the best deals in capital markets and corporate services.


CSC provides tailored administration and strategic outsourcing solutions to support the complex operations of alternative asset managers across jurisdictions and asset types while adhering to global regulations and compliance. A market leader, we work with funds of all sizes, from start-ups to the largest and most experienced fund managers in the world. Founded in 1899, CSC prides itself on being privately held and professionally managed for more than 120 years. We are the trusted partner of choice for more than 90% of the Fortune 500® and more than 70% of the PEI 300. CSC has office locations and capabilities in more than 140 jurisdictions across Europe, the Americas, Asia Pacific, and the Middle East. We are a global company capable of doing business wherever our clients are—and we accomplish that by employing experts in every business we serve. We are the business behind business®. Learn more at