Building Your Fund Operations Stack in Luxembourg

Why Fund Operations in Luxembourg Require Exceptional Infrastructure

Luxembourg is the world’s #1 hub for cross-border investment funds, with a regulatory framework that prioritizes:

• Strong governance
• Independent risk oversight
• Robust operational controls
• Transparency
• Investor protection
• High levels of automation and data integrity

To succeed in the Luxembourg ecosystem — whether as an AIFM, UCITS ManCo, or RAIF promoter — firms must build a resilient, compliant, and scalable operations stack that satisfies the expectations of:

• CSSF (regulator)
• Depositaries
• Fund administrators / transfer agents
• External auditors
• Institutional LPs

This guide outlines the essential operational systems and tools needed to run Luxembourg-regulated funds efficiently.

1. The Core Pillars of Fund Operations in Luxembourg

Luxembourg operations revolve around five core pillars:

• ‍Portfolio Oversight ‍
• Risk Management ‍
• Investor Onboarding / AML ‍
• Reporting (Annex IV, UCITS, financial reporting) ‍
• Governance & Compliance

Each pillar has specific technology requirements.

Let’s break them down.

2. Portfolio Oversight & Portfolio Management System (PMS)

Even if portfolio management is delegated, AIFMs/ManCos must demonstrate robust oversight.

A modern PMS must support:

• Multi-asset class portfolio look-through
• Strategy-level and fund-level analytics
• Real-time exposures across sectors, assets, geographies
• Performance metrics (TWR, MWR, IRR)
• FX & multi-currency handling
• Cash flow tracking
• Benchmark comparisons
• Corporate actions oversight
• Data feeds from custodians & administrators

Why it matters:

CSSF requires AIFMs/ManCos to supervise delegates and validate investment compliance — this cannot be done without a robust PMS.

3. Data Aggregation & Reconciliation Engine

Luxembourg managers often deal with:

• Multiple custodians
• Fund administrators
• Transfer agents
• Depositaries
• External managers

Your aggregation engine must:

• Consolidate multi-source data
• Reconcile positions, cash & transactions
• Flag exceptions & breaks
• Normalize FX & pricing
• Produce clean datasets for reporting
• Provide a full audit trail

Why it matters:

Depositaries and auditors expect accurate, reconciled data. CSSF expects oversight of delegated functions — meaning the AIFM/ManCo must independently validate fund data.

4. Risk Management Systems (AIFMD & UCITS Requirements)

Risk management is central in Luxembourg.

CSSF expects:

• Full independence between Risk & Portfolio Management
• Documented methodologies
• Quantitative & qualitative risk measures
• Ongoing monitoring

Required Risk Tools Include:

• Market risk analytics (VaR, beta, volatility)
• Liquidity risk indicators
• Concentration risk monitoring
• Counterparty risk
• Stress testing
• Scenario analysis
• Leverage monitoring (especially for AIFs)

For UCITS funds:

• Commitment & VaR methodologies
• Daily NAV oversight
• Liquidity buckets
• Risk limit calculations

Why it matters:

Risk teams must monitor exposures daily — not monthly. Manual spreadsheets do not meet CSSF expectations.

5. Liquidity Management & Stress Testing

AIFMs and UCITS ManCos must have tools to:

• Assess liquidity profiles
• Perform historical and hypothetical stress tests
• Measure redemption coverage
• Validate fund liquidity policies
• Document the results

These are essential for:

• UCITS liquidity risk frameworks
• AIFMD Annex IV
• Depositary oversight
• Investor protection

6. Annex IV / UCITS Reporting Engine

Annex IV reporting is mandatory for most AIFMs. UCITS ManCos also need robust reporting workflows.

Annex IV includes:

• Portfolio exposures
• Risk metrics
• Leverage (gross & commitment)
• Concentration
• Liquidity buckets
• Stress test results
• Counterparty exposures
• Fund identification details

UCITS reporting includes:

• KIID/KID updates
• Monthly/quarterly risk reports
• Depositary oversight reports
• Compliance updates

Technology must support automated extraction of:

• Positions
• Risk data
• Liquidity metrics
• Counterparty exposures

7. Investor Onboarding & AML/KYC Systems

CSSF requires a strong AML/CFT framework including:

Investor onboarding tools must support:

• KYC/KYB checks
• PEP & sanctions screening
• Source of wealth / funds verification
• Document collection & validation
• Risk scoring
• Ongoing AML monitoring
• Audit trails & evidence retention
• Investor classification
• FATCA/CRS information

Why it matters:

Transfer agents handle AML for many funds — but the AIFM/ManCo retains oversight responsibilities.

8. Governance, Compliance & Internal Control Tools

Luxembourg’s governance requirements are among the most demanding in Europe.

Key tools should include:

• Board/committee minutes & agenda management
• Document vault with versioning
• Conflicts of interest register
• Complaints register
• Breach/incident log
• Insider lists
• Compliance monitoring plan
• Delegation oversight logs
• Policies & procedures repository
• Staff training records
• Remuneration policy compliance evidence

Depositaries and CSSF expect clear audit trails.

9. Fee, Expense & Performance Calculations

Funds must calculate:

• Management fees
• Performance fees
• Watermarks
• Hurdles
• Equalisation (if applicable)
• Expense accruals
• Retrocessions / trailer fees

Technology must support:

• Automated fee models
• Auditability
• Multi-share class support
• Daily/monthly NAV impacts
• Reporting integration

Incorrect fee calculations are a major compliance risk.

10. Investor & Client Portal (Optional But Increasingly Expected)

Luxembourg fund managers benefit from portals that provide:

• Capital account statements
• Capital call & distribution notices
• Fund documents
• Performance reporting
• Exposure breakdowns
• ESG metrics (if applicable)
• Secure messaging
• Custom white-labeled branding

Investors expect transparency and digital access.

11. Putting It All Together: The Complete Luxembourg Fund Operations Stack

Your complete stack should include:

1. ‍Portfolio Management System. Exposure, performance, analytics. ‍
2. Data Aggregation Platform. Custodians, TAs, administrators. ‍
3. Reconciliation Engine. Positions, cash, transactions. ‍
4. Risk Management System. Liquidity, stress testing, VaR, leverage. ‍
5. Annex IV / UCITS Reporting Tools. Automated data extraction & file production. ‍
6. Investor Onboarding & AML System. KYC, risk scoring, document capture. ‍
7. Compliance & Governance Tools. Registers, monitoring, breaches, committees. ‍
8. Document Vault & Audit Trail. Policies, minutes, investor files, fund docs. ‍
9. Fee Calculation Engine. Management, performance, distribution fees. ‍
10. Investor Portal. White-labeled reporting access.

This is the minimum viable operational setup for a CSSF-regulated AIFM or UCITS ManCo.

12. Why Luxembourg Firms Choose Reluna

Reluna provides all the essential systems in one integrated platform, including:

• Portfolio management & analytics
• Data aggregation & reconciliation
• Annex IV reporting preparation
• Risk & exposure dashboards
• Liquidity management
• AML/KYC onboarding
• Document vault & audit trail
• Compliance & governance tools
• Fee engine
• Investor portal
• Multi-fund/multi-entity support

Key advantages

• Reduces operational cost
• Simplifies oversight of delegated PMs
• Strengthens governance for board & CSSF engagement
• Ensures clean, reconciled data for risk & reporting
• Scales across RAIF/SIF/SICAV umbrellas

Reluna helps Luxembourg managers operate with institutional-grade infrastructure from day one.

13. Next Steps: Build a CSSF-Ready Fund Operations Stack

If you're launching an AIFM, UCITS ManCo, RAIF platform, or expanding your Luxembourg presence, the right operational infrastructure is essential.

👉 Request a Reluna demo to see how Reluna supports Luxembourg fund operations across risk, reporting, oversight, and investor management