This initiative not only simplifies compliance but also ensures that the regulatory environment remains adaptable to the diverse needs of investors and market participants. Key highlights include:

• Scope: Applies to SIFs, SICARs, and Part II UCIs, excluding certain fund types such as ELTIFs and MMFs.
• Investment rules: Clarifies asset concepts, risk-spreading principles, and investment limits, with flexibility for well-informed or professional investors.
• Transparency: Mandates clear, accurate disclosures in sales documents, covering investment policies, risks, and redemption terms.
• Borrowing & techniques: Sets borrowing limits and provides guidelines for efficient portfolio management techniques.
• SICAR-specific rules: Defines risk capital criteria, emphasising development intent, specific risks, and exit strategies.

A notable feature of the circular is its emphasis on flexibility and investor-centric provisions. For instance, it allows for tailored investment limits and derogations based on the type of investor, such as well-informed or professional investors, while maintaining robust risk-spreading principles.

Additionally, the circular underscores the importance of transparency, requiring detailed and accurate disclosures in sales documents to enable investors to make informed decisions. This includes clear guidelines on investment strategies, risks, redemption terms, and borrowing limits, ensuring that funds operate with a high degree of accountability and investor protection.

By addressing key areas such as risk capital criteria for SICARs, the use of portfolio management techniques, and the treatment of borrowing, the circular reflects the CSSF's commitment to fostering a dynamic yet secure investment environment. It also provides transitional provisions to ensure a smooth implementation for existing funds, reinforcing its role as a forward-looking regulatory instrument designed to support the growth and stability of Luxembourg's investment fund industry.

The Circular 25/901 can be found here