Today, the European Parliament voted in favor of amending the European Long-Term Investment Funds (ELTIF) Regulation, following the European Commission’s proposal in November 2021. The revamped regime now has the potential to become an attractive “go-to” fund structure for long-term investments, with particularly beneficial improvements for retail investors. Important legislative changes have made the ELTIF fund structure more attractive to asset managers and investors alike, including:
 

• A broader scope of eligible assets, including a simplified definition of “real assets”, an increased market capitalisation threshold, and the possibility to invest in FinTechs, STS securitisations and green bonds;
• Flexible fund rules with an increased pocket for liquid investments, more flexible risk diversification requirements, the ability to invest in fund-of-funds & master-feeder structures, as well as utilising increased leverage; and
• Improved access and safer conditions for retail investors, including removal of the previous €10,000 entry ticket, removal of the minimum net worth requirement, and harmonization of the distribution regime through alignment of the ELTIF suitability test with MiFID II.

According to Antoine de la Guéronnière, Vice-Chair of the EFAMA Fund Regulation Standing Committee: “The changes to the current ELTIF framework are an excellent and necessary step forward that will assist ELTIF in becoming a complementary source of financing for the European real economy and notably, accessing the almost untapped retail market for longer-term real assets investments.”
 

Elona Morina, Regulatory Policy Adviser at EFAMA, stated, “As the new criteria have finally been brought in line with what is required to make the product an attractive and competitive long-term investment structure, the redesign of ELTIF is generating a great deal of interest among industry participants.”
 

The revised ELTIF Regulation is expected to be published in the Official Journal of the EU in March 2023 and enter into application in Q1 2024. Existing ELTIFs launched under the current regime will continue to be deemed compliant for five years following the entry into application of ELTIF 2.0. Any ELTIFs authorized under the current regime, but wishing to take advantage of the new regime can do so provided that they notify their national competent authority.

-ENDS-

Notes to editors

You can find additional information on the ELTIF regulation and review on our website here.

For further information, please contact:

Hayley McEwen

Head of communication & membership development

Tel: +32 2 548 26 52

Email: Hayley.McEwen@efama.org