The European Fund and Asset Management Association (EFAMA) today shared its recommendations to the European Commission on measures to be taken to improve the European Long-Term Investment Fund (ELTIF) regime.
Very few ELTIFs were launched by
professional investment managers since the Regulation became
applicable in December 2015. Only around 28 ELTIFs have been
established, with a low asset base (below 2 billion euros). From
that perspective, the ELTIF Regulation has failed to meet its
objective of boosting European long-term
investments in the real economy.
However, EFAMA 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.
EFAMA 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.
Broaden 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.
Lower the current
€10 million threshold for investments in “real assets”,
thereby broadening choices for managers to consider smaller
investment projects.
Remove 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.
Guarantee
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 full response can be found
here: 
EFAMA
ELTIF consultation response
EFAMA
© EFAMA - European Fund and Asset Management Association
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