Substance in the spotlight

Welcome to the 2022 edition of the KPMG Luxembourg Alternative Investments Substance Survey. In this fourth edition we break down how substance trends have evolved over the past twelve months, we deep dive into the difference between pre-pandemic and post-pandemic Luxembourg and we look at key functions, like sophistication and consolidation.

The pace of the growth and sophistication we found in our 2022 Substance Survey far exceeds our expectations. While there are several reasons for this trend, we have identified the following two main factors:

  • Consolidation: we generally observe that the evolution of the amount of Luxembourg AIFMs has flattened but there is an incremental growth of new Luxembourg funds as the main fundraising vehicle; and
  • Sophistication: the weight of Luxembourg in the wider fund value chain has increased given that more and more functions (including AIFM functions) are performed in Luxembourg; and we expect recent regulatory and tax proposals to reinforce this trend.

This is very different from previous years, where growth was mainly driven by the increase in Luxembourg AIFM licenses because of Brexit.

Are Luxembourg platforms moving towards a more mature model? Have they reached the right level of maturity? These are the questions we aim to answer with the next edition of Substance Survey.

Substance Survey

Selected sample: participants to the 2020 and 2022 Substance Survey editions


Survey respondents


Luxembourg regulated AIFMs


Luxembourg Investment Funds


Luxembourg SPVs


Luxembourg AuM



A massive, general growth

Since the last survey in 2020 there has been tremendous growth when it comes to the number of funds/ Special Purpose Vehicles (SPVs)/ Full-Time Equivalent (FTE) and office space.

2020 vs 2022 Growth

The amount of Luxembourg investment funds managed by the survey participants increased by 40% since 2020. It’s mostly Debt and Real Estate players that drive this increase. In 2022, 85% of the participants raise funds via a Luxembourg fund which represents an increase of six percentage points in comparison to 2020. It is no surprise that the use of RAIFs is becoming more and more common.

It’s clear that Luxembourg is no longer a jurisdiction for SPVs solely but a place consolidating fund raising, fund management and the investment infrastructure.

Since 2020, staff has increased by more than 50% and the office space by almost 70%. It’s interesting to see that even after two years of a worldwide pandemic, lockdowns and people working in home office, the office space per FTE increases amongst our participants. 

More hiring intentions

Luxembourg continues to be a very attractive market. This gets clear when considering that the respondents expect their activities in Luxembourg to continue to increase in the coming years, which is evident when looking at their hiring intentions: In 2022, more than 80% of the respondents have an average of five open positions, while in 2020, only 65% of the same participants intended to hire on average 1.3 FTEs.

This can be explained by the increasing level of activity but also by the regulatory burden that’s involved when going into the regulated space and the increasing compliance requirements (tax or regulatory). 


Average FTE


Estim. FTE if hiring expectations are met

Does having a dedicated Luxembourg AIFM make a difference?

When we break down the results by platforms with and without a dedicated Luxembourg AIFM, we can observe the following: 

Luxembourg platforms with dedicated AIFM

130 SPVs

32 FTE

746 sqm

intention of hiring

Luxembourg platforms without dedicated AIFM

41 SPVs


158 sqm

intention of hiring

Luxembourg platforms with dedicated AIFM turn out to have more SPVs, more FTEs, more office spaces and all of them intend to hire more staff. Since the last survey platforms with a dedicated AIFM are growing faster and the substance gap with non-AIFMs platforms is widening. 

Substance Survey


Considering the above, it is clear that the alternative industry is relying on an increasing footprint in Luxembourg whether this is in terms of FTEs or infrastructure, especially those with a dedicated AIFM.

These ones entered into a consolidation and a sophistication phase as described above.

Such a trend did not come as a surprise and is explained by multiple factors and in particular by the following: increasing substance requirements brought forwards by the EU authorities or source jurisdictions; regular challenges on substance and beneficial ownership; additional disclosure or compliance rules; and complexification of the regulatory framework applied to investment funds as well as additional scrutiny of the EU or local regulators.

We believe that the industry is at the edge of a strategic decision when it comes to defining the business model for the years to come. In light of the Principal Purpose test and the recent EU ATAD 3 proposal, there will be an increasing need to consolidate a certain level of operations and infrastructure into one jurisdiction rather than relying on several platforms as we observed in several instances. Therefore, any feasibility study or decision making towards a consolidation into one jurisdiction or the interposition of a UK QAHC (a non-EU jurisdiction) between Luxembourg investments funds and EU investments should be considered carefully as it would detrimentally weaken the rationale of existing Luxembourg Alternative Investment platforms.

Want to know more?

Are you interested in knowing more? The above information is only a small portion of the 2022 Substance Survey results. Do not hesitate to contact us if you would like access to more detailed no-name information about the industry and your peers. 

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