CSSF clarifies its expectations in a thematic review: Valuation framework for less liquid and illiquid assets

On 4 June 2026, the CSSF published a feedback report setting out its supervisory expectations regarding the valuation of less liquid and illiquid assets by IFMs. The report provides guidance, based on the applicable regulatory framework, on the implementation and maintenance of robust valuation policies, procedures and controls for the AIFs and UCITS managed by IFMs. It identifies a number of observations and recommendations aimed at improving consistency and strengthening valuation practices across the market. All IFMs are expected to perform a benchmarking exercise against these supervisory expectations and, where necessary, implement appropriate remedial measures. In particular, the CSSF highlights the following key expectations: 

• Valuation processes (new (sub-)funds/asset types): IFMs must formally review all material valuation aspects before launching new (sub-)funds or investing in new asset classes/strategies, ensuring valuation policies are fit-for-purpose upfront 
• Valuation frequency: Assets must be revalued whenever prior valuations are no longer representative; IFMs should implement controls at each NAV date to confirm valuations remain fair and appropriate 
• Valuation methodologies and approaches: Policies should clearly document methodologies by asset class, including model inputs, assumptions, and limitations, and align with internationally recognized valuation standards where disclosed 
• Use of valuation models & governance: Material model changes must be independently validated and approved by senior management; valuation frameworks and methodologies should be reviewed at least annually with proper documentation 
• Valuation in stressed market conditions: IFMs should ensure operational readiness to perform valuations during market stress, with flexible methodologies and lessons learned from past disruptions integrated into policy reviews 
• Escalation of valuation issues: Policies must provide for the timely escalation of significant valuation issues to senior management and, where relevant, fund governing bodies 
• Pre-investment valuation checks: AIFMs should apply risk-based pre-investment controls, especially for illiquid assets, with clearly defined responsibilities, including the valuation function where applicable 
• Valuation controls during holding period: AIFMs must assess exposure to valuation risk and, where material, implement risk-based controls to ensure valuation reasonableness, considering regulatory factors and asset characteristics 
• Valuation controls and outcomes: Robust valuation controls are essential, particularly for model-based valuations, to identify weaknesses and determine whether adjustments or methodological changes are needed 
• Oversight of third-party valuers: IFMs must perform due diligence and maintain ongoing oversight of external valuers, ensuring the reliability and reasonableness of their inputs, data, and outputs 

How EY can help 

If you require support in aligning with the latest CSSF expectations, we would be pleased to assist. Our regulatory specialists can guide you through the evolving requirements relating to valuation governance and associated control frameworks. In addition, our dedicated Valuation team can provide in-depth insights into valuation methodologies, ensuring robustness and alignment with market best practice.