ELTIF
What is it?
European Long-Term Investment Funds (ELTIFs) are vehicles created by the European Union to channel capital into sectors requiring sustained financing, such as infrastructure, renewable energy, affordable housing, or SMEs. They are subject to specific regulations that promote investment in the real economy, ensuring robust protection for investors. One of their key features is the obligation to allocate a significant portion of their assets to illiquid investments, such as unlisted companies or real assets.
The ELTIF regulation was updated in 2023 to make them more accessible, especially to retail investors. Notable improvements include the reduction of entry barriers, more flexible diversification rules, and the possibility of offering partial liquidity. Additionally, thanks to their “European passport,” they can be marketed across all EU countries without additional requirements, facilitating capital raising at the continental level.
Key aspects to consider
The main features of ELTIFs include:
- Investment Horizon: ELTIFs are designed for long-term investments, which means a longer commitment period and lower liquidity.
- Type of Assets: At least 55% (according to the reformed regulation) must be invested in real assets or unlisted companies.
- Investor Protection: They include specific requirements for transparency, suitability assessments, and supervision to ensure investor protection, particularly for retail investors.
- Tax and Regulatory Advantages: In some countries, they may offer tax benefits and have the European passport, allowing for cross-border distribution.
ELTIFs represent an attractive option for those looking to diversify their portfolio with stable investments that have an impact on the real economy, especially in strategic sectors such as infrastructure or innovation. Their regulatory framework offers solid guarantees and a European perspective that favors efficiency and diversification. However, their lower liquidity and the extended time horizon they require may not be suitable for all investor profiles, so it is crucial to carefully assess goals and needs before investing.