ELTIFs are vehicles designed to boost private sector investment in infrastructure, machinery or equipment, research or fostering the growth of small and medium sized companies, provided they have some benefit to the overall European Union (EU) economy.
The new funds will have to apply for authorisation, have a regulated structure and play by uniform rules to assure that they offer long-term and stable returns.
The funds are seen as one of the key building blocks towards an EU-wide capital markets union (CMU) to boost cross border investments into the region and reduce the reliance of business on bank lending.
“I am very pleased to launch an efficient new tool that will not only give a major boost to financing long-term investment… but will also help build the Capital Markets Union,” said Alain Lamassoure, a French MEP who has been leading the push to pass the legislation.
While the new funds are primarily going to be attractive to big institutional investors like pension funds and life companies, the new legislation does provide for retail investor involvement.
The minimum investment will be €10,000 and there are agreed redemption rules to enable funds with liquid assets to return an investor’s money upon request.
Paul Stanfield, chief executive of the Federation of European Independent Financial Advisers, said it was notable that the EU had tried to make ELTIFs more appealing to retail investors.
However, he added: “My understanding is that these are designed to attract large institutional funds to fund major national and international projects.”
