Skip to main content

EFAMA Recommends Changes To Kick Start ELTIF Regime

Only around 28 ELTIFs have been established since the E.U.'s regulation became applicable in December 2015, with a low asset base (less than EUR2bn). From that perspective, the ELTIF Regulation has failed to meet its objective of boosting European long-term investments in the real economy.

Trade association the European Fund and Asset Management Association believes that the ELTIF regime – if properly adapted – can become a powerful tool to deliver on some of the Capital Markets Union’s (CMU) objectives and represent an attractive vehicle for investors in a low-for-long interest rate environment. The organisation recommends the following key changes to the current regime:

Turn ELTIF into an open-end structure alongside the existing closed-end one, by removing current limitations to its life cycle and by introducing appropriate redemption terms and include adequate liquidity management tools; broadening the scope of the current eligible asset provision to include other types of funds, besides ELTIFs, EuVECAs and EuSEFs, as well as non-listed financial start-up companies; lowering the current €10mn threshold for investments in “real assets”, thereby broadening choices for managers to consider smaller investment projects; removing quantitative limits (i.e., €500.000, 10% of the investable portfolio and a minimum of €10.000) and allow investments into ELTIFs as from €1.000 to reduce “supply-side” constraints; and guaranteeing the tax neutrality of the ELTIF structure to make it a worthwhile investment tool.

Commenting on the recommended changes, Federico Cupelli, senior regulatory policy adviser at EFAMA, said: “Profound changes are necessary to make ELTIFs an EU product of choice and help deliver on some of the CMU’s objectives. These include promoting more participation in less-liquid, real asset markets, as well as allowing both institutions and individuals to invest a part of their wealth over the long-term and diversify their exposure into private markets. In this regard, we advocate a recalibration of the Regulation’s asset eligibility requirements, minimum investment amounts and adequate tax incentives”.

© The Sortino Group Ltd

All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or scanning or otherwise, except under the terms of the Copyright, Designs and Patents Act 1988 or under the terms of a licence issued by the Copyright Licensing Agency or other Reprographic Rights Organisation, without the written permission of the publisher. For more information about reprints from AlphaWeek, click here.