23 April 2014

EFAMA: Industry welcomes European Parliament’s vote on European long-term investment funds

The three leading EU associations welcome the flexibility added in the proposal and in particular, the following features:

A flexible regime as to the lifetime that allows the design of ELTIFs to be based on the concrete needs of investors and their investment strategy.

• Inclusion of listed small and medium-sized enterprises up to 1 billion EUR market capitalisation in the scope of eligible investments. There are thousands of small and mid-cap companies listed on European regulated markets and multilateral trading facilities which are crucial to the economic recovery of Europe. They create the largest number of new jobs and the backbone of sustainable and dynamic long-term investment.
• Additional flexibility for professional investors and enhanced status for semi-professional investors. Professional and retail investors have different needs and expectations when it comes to their investments; the creation of separate professional and retail ELTIFs will help in providing suitable investment vehicles for both categories by giving professional ELTIF managers the possibility to disapply the provisions that are fit mainly for retail investors. The identification of the third category of semi-professional investors reflects the market needs of actors that currently have a greater interest in investing in long-term projects.
• Maintenance of the "retail passport" for ELTIFs. The European Parliament report keeps retail investors in the scope of eligible investors in the ELTIF framework which is welcome and will help to maximise the pool of investors.

However, on a crucial point for investors, i.e. the right of investors in "retail ELTIFs"

to redeem their shares prior to the end of the ELTIF’s lifetime, the European Parliament report does not create an efficient framework. This right should be left to the discretion of the ELTIF manager who should be provided with a list of available redemption policy tools while having the obligation to fully disclose the choice of these policy tools to the ELTIF investors.

Peter De Proft, Director General, EFAMA said: "We hope that discussions in the Council and the upcoming trilogues will ensure a more balanced and better-designed structure of ELTIFs, with the aim of matching investors’ needs and facilitating long term investment in the EU. If ELTIFs are to be successful, both of those objectives have to be fully respected."

Full press release

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