Amendments to the framework around European Long-Term Investment Funds (Eltif) have been voted through by the European Parliament.
Their reform had been proposed by the European Commission in November 2021.
The regime has been revamped with hopes of establishing the Eltif as the go-to structure for retail investor in long-term assets.
The new regulations include a broader scope of eligible assets, such as green bonds, fintechs, STS securitisations – a simplified definition of ‘retail assets’ – and an increased market capitalisation threshold.
Eltifs will also be able to invest in a fund of funds and master-feeder structures and utilise leverage.
To improve access to retail investors, the minimum net worth requirement has been removed, as well as the previous €10,000 entry ticket.
The suitability test for the Eltif has also been aligned with that of Mifid II to support regulatory harmonisation and ease compliance burdens.
These changes have been welcomed by the European Fund and Asset Management Association (Efama).
“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,” said Efama regulatory policy adviser Elona Morina.
These new rules are expected to be published in the EU’s Official Journal in March before entering into application in the first quarter of 2024.
Existing Eltifs will continue to be compliant for five years following the entry into the application of Eltif 2.0.
© 2023 funds europe
