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Rikard Lundgren (Steendier) : Luxembourg Funds – Two Different Worlds 

After working in various European countries for decades, Rikard Lundgren has established himself in Luxembourg, where he serves as an independent director in several international organizations. An interview with Rikard Lundgren.


Is the Luxembourg fund iNED a Venture Capitalist or bank employee?

”You don’t really take any risk. You are well paid for doing not very much. You should understand that there are many who are willing to take your place.”

The Luxembourg fund lawyer’s presentation words made me think; What world does he live in? Not mine.


Is bigger better?

What he said can maybe sometimes apply to iNEDs of funds managed by very large Asset Management firms who have the same resources as a big bank to analyze every risk, cover every legal and regulatory aspect with in-house lawyers, analysts, systems etc. Here an iNED’s role can be limited to some polite questions and signing swiftly.

Ad Nutum

Some large AM organizations see the iNED as an expensive speed bump. Their iNED contracts includes the iNED being fired ad nutum. One could ask how independent an iNED is with such a contract. Especially if he has a significant part of his overall earnings from that same sponsor.

Sometimes great, always challenging 

However, Luxembourg also hosts a very different universe of funds. Small, start-up, with limited resources and no experience of the Luxembourg fund eco-system with all its’ service providers, regulations, and practices. They are often newcomers to Luxembourg, run niche strategies, are more innovation driven than administratively experienced and are managed by just a few persons. They are exposed to Venture Capital dynamics; Only 1-3 make it and become stars, the rest merely survive or fail. 


“Like eating glass and staring into the abyss of death.”

An entrepreneur friend of Elon Musk


The job of an iNED in such funds is very far away from the turn-up-and-sign funds the lawyer referred to. The risks for small funds are considerable and numerous. The small fund iNED’s role is often more of tutor, stakeholder (without upside) and intermediator between sponsor and service providers. 


What could possibly go wrong?

The sponsor runs out of working capital. A partner gets offered a safer and more lucrative normal job. 

TER becomes too high due to not enough AUM.

Politics. Sanctions. Pandemic. War in Europe. Whatever. The unknown unknowns can and does kill small funds with ease.


With small funds, near-death moments become part of daily life. Performance and investor following have to materialize soon after inception, or decline is certain. The iNED is sometimes left with the unwinding of the legal entities while service providers back paddle and send inflated final invoices, which the iNED has to explain or help negotiate. At such times, the iNED’s job is anything but risk-free or over paid and his hourly pay may turn out to be lower than that of his chiropractor or car mechanic.

“I’m not a lawyer, but…”

The small fund will often see the iNED as their go-to-man for anything Luxembourg related. This includes explaining and defending new regulations that may make no sense to the sponsor but which the fund has to comply with. Most lawyers are charging for such questions whereas the iNED only gets a fixed fee. So they ask the iNED. No big AM firm managed fund will ask this of their iNEDs. Some Service Providers have bigger risk appetites than the iNED. For them rule adherence and discipline looks like an insurance business. Sometimes bad things happen. While the iNED is put on the spot. If a fund falls short on regulatory compliance the iNED’s career may come to an abrupt end.  

Service Providers may kill you!

Two examples. A bank “lost” 5% of a fund’s total AUM, when a non-supervised junior bank employee acted on a fraudulent money transfer. Who had to bring out his best bad-cop impersonation and read the riot act to the bank’s senior management to convince them to acknowledge their mistake and compensate the fund?

The iNED. 

Service Providers change strategy like shirts. “Sorry but you no longer fit our strategic focus. Can you please find another provider? You have three months.” Who gets to find a replacement? 

The iNED.

Such situations never occur with a large AM fund. To the small fund iNED it is just another day in the office. 

The small fund is often extremely busy with 100 tasks and only a few people to perform them. They naturally turn to their iNED for support and help. The iNED often has to put in a lot more than 60 minutes worth of work for every hour charged. The turnover of small funds is higher so attracting new clients becomes an additional task for the small fund iNED. So, all considered, why would any iNED want to work with small funds? Paraphrasing English Mountaineer George Mallory; Because they are there!      

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