The European Fund and Asset Management Association ( Efama) and Arendt have published FAQs covering “burning questions” asset managers may have about the new European Long-Term Investment Fund (Eltif) regime.
The new Eltif regulation became applicable on January 10, 2024.
Efama’s frequently asked questions publication covers various aspects of Eltifs, addressing questions about their role in the European economy, basic fund rules, eligible assets, portfolio composition requirements, permissible fund structures, prohibited activities, investor eligibility criteria and specific requirements for retail investors. It delves into operational considerations such as redemptions and leverage, outlines guidelines for marketing and distribution of Eltifs, and provides insights into the authorisation and registration processes.
The FAQ also highlights the role of member states, encompassing aspects like tax treatment. Additionally, it offers information on the timeline of developments so far and outlines the next steps in understanding and navigating the Eltif landscape.
Proposed ELTIF rules have caught the attention of asset managers, raising concerns about potential hindrances due to pending technical rules, especially those outlined in the European Securities and Markets Authority’s draft regulatory technical standards (RTS) from December. These rules, particularly regarding redemption policies, risk imposing impractical choices on Eltifs, such as excessive notice periods or disproportionately high allocations to UCITS-eligible assets. This contradicts the intended spirit of Eltif 2.0, posing a threat to attracting investors, highlighted Efama.
“We therefore urge the European Commission, who is currently assessing the RTS, to reconsider some of the more harmful proposals to ensure the future success of the ELTIF product,” it stated.
Tanguy van de Werve, director general at EFAMA, commented: “The new regime is a great achievement which allows ELTIFs to become a key additional source of financing for the European real economy. It will be critical that the accompanying technical standards follow the spirit of the Eltif regulation and align with wider trends and best practices in liquidity management. With the correct regulatory parameters in place, Eltif could contribute to the sustainable transition through alternative, long-term investments to benefit the European economy.”
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