Investment Fund Setup: A Complete Step-by-Step Guide

Investment Fund Setup

At FundSetup, we specialize in helping asset managers, entrepreneurs, and institutions set up investment funds in leading global jurisdictions like Luxembourg, DIFC, ADGM, and Cyprus. Whether you’re launching a hedge fund, private equity fund, real estate fund, or venture capital vehicle, this guide walks you through the entire setup process from concept to launch.

We’ve structured this content based on what we've seen work in the real world—clear, actionable, and investor-ready fund structuring that meets global compliance standards.

Why Set Up an Investment Fund?

Creating a regulated investment fund allows you to:

• Raise capital from multiple investors

• Pool investments under a legally compliant structure

• Deploy diversified strategies across asset classes

• Enhance investor confidence and transparency

• Access global markets with regulatory passporting

Whether your goal is asset management, wealth preservation, or capital growth, setting up a fund ensures scalability, professional management, and institutional-grade compliance.

Types of Investment Funds You Can Launch

When we help our clients build their fund strategy, we begin by defining the type of fund that aligns with their objectives, investor base, and target jurisdictions.

1. Hedge Fund

Designed for professional investors looking for alternative strategies like long/short equity, derivatives, macro, and arbitrage. Typically requires a light or full AIFM setup, depending on the jurisdiction.

2. Private Equity Fund

Structured to invest in unlisted companies or startups with a medium-to-long-term growth strategy. These are often closed-ended and benefit from jurisdictions like Luxembourg, Cayman Islands, or DIFC.

3. Real Estate Fund

Ideal for acquiring, managing, and developing income-generating properties. We help set these up as RAIFs, SIFs, REITs, or Exempt Funds depending on your jurisdictional preference.

4. Venture Capital Fund

Focused on early-stage startups and tech-driven businesses. These are often created under flexible partnership models such as SCSp in Luxembourg or VC Fund structures in ADGM.

5. ESG & Impact Funds

Funds that align with environmental, social, and governance principles. ESG compliance is increasingly demanded by LPs and institutional investors, and we ensure your structure reflects that.

Step-by-Step Process to Set Up an Investment Fund

Here’s a detailed breakdown of how we guide our clients through the fund setup journey:

Step 1: Define the Fund Strategy and Objectives

Before anything else, we help you define:

• Investment strategy (equity, fixed income, private markets, alternatives)

• Target investor base (retail, HNWI, institutional, professional)

• Liquidity terms (open-ended vs closed-ended)

• Jurisdictional preference (Luxembourg, DIFC, ADGM, etc.)

Step 2: Choose the Right Fund Structure

We advise you on the most appropriate legal and regulatory structure, such as:

• RAIF, SIF, SICAV in Luxembourg

• Exempt Fund, QIF in DIFC or ADGM

• Umbrella or stand-alone fund

• Limited Partnerships (SCSp/SCS/LP)

Each option impacts tax, regulation, and investor expectations, so this is a vital step.

Step 3: Select the Legal Form and Domicile

We handle the incorporation process and register the legal entity in the chosen jurisdiction. This includes drafting:

• Memorandum & Articles of Association

• Offering Memorandum / Prospectus

• Limited Partnership Agreements

• Fund Management Agreements

Step 4: Appoint Key Service Providers

A professional fund requires a network of reliable service providers. We help you onboard:

• Fund Administrator

• Custodian / Depositary

• Auditor

• Legal Counsel

• AIFM or Fund Manager

• Compliance Officer & MLRO

We work only with top-tier service providers with global recognition and strong reputations.

Step 5: Regulatory Approvals and Licensing

Depending on the jurisdiction and fund type, we:

• Submit applications to the local regulator (CSSF, DFSA, FSRA)

• Prepare regulatory documents (business plan, financial forecasts)

• Ensure compliance with AIFMD, FATCA, CRS, AML, and local rules

• Establish the risk management and compliance framework

Step 6: Bank Account & Fund Capitalization

We help you open institutional-grade fund bank accounts and assist with capital commitment processes, drawdowns, and investor onboarding under KYC/AML standards.

Step 7: Fund Launch and Ongoing Management

Once approved and capitalized, your fund is ready to operate. We continue to support you with:

• NAV calculation and investor reporting

• Annex IV, CRS, FATCA, AML reports

• Year-end audit coordination

• Investment committee governance

Popular Jurisdictions for Investment Fund Setup

Here’s what makes some jurisdictions particularly appealing:

Luxembourg

• Europe’s top fund domicile

• Access to AIFMD and UCITS passport

• Ideal for RAIFs, SIFs, SICARs, and UCITS

DIFC (Dubai)

• Internationally recognized regulatory regime

• English common law framework

• Low tax and easy access to MENA investors

ADGM (Abu Dhabi)

• Progressive, tech-friendly jurisdiction

• Strong VC and FinTech ecosystem

• Regulated fund setup with international standards

Cyprus

• Cost-efficient EU fund jurisdiction

• Competitive tax incentives

• UCITS and AIF-compliant structures

Tax Considerations When Setting Up a Fund

We collaborate with tax specialists to ensure your fund benefits from:

• No capital gains tax on qualifying assets

• Double Tax Treaties in 80+ countries

• VAT exemptions on fund management

• No withholding tax on profit distribution (in most jurisdictions)

• Transparent reporting aligned with CRS/FATCA

We aim for tax neutrality, helping you maximize returns for your LPs and investors.

Why Choose FundSetup for Your Fund Launch

With offices in DIFC, Dubai, and partners across Luxembourg, Cyprus, and ADGM, we provide seamless, compliant, and fast fund launches. Our team ensures:

• Turnkey setup with all documentation and licensing

• Access to top-tier service providers

• Full transparency on fees and timelines

• Ongoing fund management support post-launch

We’re not just a consultancy. We’re your fund structuring partner for the long term.

Final Thoughts: Launch Your Investment Fund with Confidence

Whether you’re building your first fund or expanding globally, investment fund setup requires a tailored, compliant, and strategic approach. With the right jurisdiction, structure, and service providers, you can attract top-tier investors, scale your capital, and drive long-term performance.

Let us walk you through the process from strategy to execution with the precision, compliance, and experience you need.