Third-party AIFM vs owning an AIFM: What to consider

By Fèmy Mouftaou, Head of Fund Strategy, Continental Europe and Business Development, Benelux

A key question for non-EU managers preparing to market a new fund in the region is whether to rent a third-party alternative investment fund manager (AIFM) or establish a local AIFM.

Both approaches provide access to the Alternative Investment Fund Managers Directive (AIFMD) framework, but they differ significantly in cost, speed, control and regulatory exposure.

Owning your own AIFM

This approach offers more independence and control over the fund management and distribution processes. A management firm would have the ability to build long-term infrastructure and reputation, as well as have flexibility around product selection and strategy. The downside is a longer go-to-market timeline, additional compliance and hiring burdens as well as potentially demanding regulatory inspections and oversight.

Third-party AIFM

This second option provides for more flexibility and cost control, especially when launching a product in the EU for the first time. A third-party AIFM is an external, fully-licensed management company that delegates portfolio management back to the fund sponsor while retaining regulatory responsibility for compliance, risk management, reporting and distribution under AIFMD. It is a well-established model, especially in EU member states Ireland and Luxembourg, where many funds are domiciled.

Key considerations when choosing  a third-party AIFM to raise capital

For firms that opt for the third-party route, getting this process right is integral to the success of a fund launch. Here are the key questions to consider:

• Does the third-party AIFM hold the required licences and permissions to operate your fund? Licences can be asset type specific – for example, not all AIFMs in Luxembourg have permission to manage infrastructure funds
• Does the third-party AIFM’s pre-marketing and marketing service meet the necessary compliance standards to handle a fund-raise in the EU?
• Is the third-party AIFM part of a fund administration group? This is not mandatory but an integration with your fund administrator can be more efficient while also reducing the number of service providers you need to deal with
• Check the operational capacity of the third-party AIFM to ensure it can adequately handle your workflows. Third-party AIFMs manage funds initiated by multiple promotors and will have varying levels of resources dedicated to each client
• Also check what additional services the AIFM is offering and whether they can adequately cover all your needs. For example, do they provide anti-money laundering (AML) support including money laundering reporting officer (MLRO) services, risk management services, or reporting and compliance administration?
• Examine the quality of their risk and AIFM reports. Do the reports cover provider risks? Are they tailored to the fund’s prospectus or are they generic? Make sure to have any documents checked by legal and investment teams
• Consider how well integrated they are with supplementary service providers such as depositary and custodian firms. A close working relationship with such firms should mean a faster and smoother fund launch process
• Plan for migration in case you decide to set up your own AIFM later.

The advantages of third-party AIFM providers

In short, the choice between owning or renting your AIFM comes down to scale, ambition and timing: Own if you have the resources and a long-term European strategy. Rent if you value speed, cost-efficiency and outsourced expertise. For many managers, renting first and owning later is the most effective way to balance opportunity with regulatory demands.

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We have well-established expertise and a strong track record in helping global asset managers access European investors – whether through our AIFM services or our third-party AIFM platforms in Luxembourg, France, Ireland and the UK.

From UCITS and AIF structures to National Private Placement Regime (NPPR) solutions, we provide tailored support to suit your strategy, whether you prefer a hosted or standalone fund model.

Contact us today to explore how we can help you navigate the European landscape with confidence and efficiency.