Luxembourg is a little country (or duchy) with a big presence in the hedge fund world.  Hedge fund managers looking to access investors or investments in Europe, Latin America or Asia have regularly turned to Luxembourg as a domicile for fund formation.  The tax and regulatory climate there is receptive to hedge funds and managers, the service provider industry is well developed and the jurisdiction is geographically close to key developing and developed markets.  Moreover, the growing popularity of funds organized as Undertakings for Collective Investment in Transferrable Securities (UCITS funds) and the impending effectiveness of the Alternative Investment Fund Managers (AIFM) Directive have increased both the attractiveness and complexity of Europe as an alternative investment jurisdiction – and, consequently, the relevance of Luxembourg.  In light of the importance of Luxembourg to many hedge fund managers, the Hedge Fund Law Report recently interviewed Marc Saluzzi and Michael Ferguson, President and Director, respectively, of the Association of the Luxembourg Fund Industry (ALFI).  The general purpose of our interview was twofold.  For HFLR subscribers that are not familiar with Luxembourg, the purpose was to highlight the benefits and downsides of Luxembourg as a hedge fund domicile.  For HFLR subscribers that are familiar with Luxembourg, the purpose was to illustrate the diverse ways in which hedge fund managers can access the various services available in Luxembourg, and the circumstances in which they should avoid Luxembourg – to illustrate, that is, the scope and limits of market practice in Luxembourg.  To effectuate these purposes, our interview with Saluzzi and Ferguson covered the following topics: the specialized investment fund (SIF) regime for hedge funds, including a discussion of the governance, service provider, reporting and regulatory audit requirements applicable to SIFs; a comparison of SIFs versus funds organized in Caribbean or other European jurisdictions; recent legal developments impacting Luxembourg-domiciled funds and managers; the establishment of a new limited partnership regime in Luxembourg; the cost of establishing a hedge fund in Luxembourg; necessary improvements to make Luxembourg a more attractive hedge fund destination; common mistakes hedge fund managers make when establishing funds in Luxembourg; advice for hedge fund managers establishing funds in Luxembourg; advantages and disadvantages of establishing funds and a manager presence in Luxembourg to address the AIFM Directive; the concept of “ManCos”; and the advantages and disadvantages of establishing UCITS funds in Luxembourg.