The second iteration of the European Lengthy Time period Funding Fund (ELTIF) construction has been heralded as a game-changer for the democratisation of long-term asset investing.
However business consultants have steered that the brand new car shouldn’t be being used to focus on the retail market simply but.
The brand new EU guidelines, often called ELTIF 2.0, got here into pressure on 10 January, with an purpose of encouraging particular person buyers to place cash into long-term, illiquid belongings.
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“ELTIF 2.0 is having fairly an affect on the business as there’s the chance to increase entry to personal belongings, together with non-public credit score, to retail buyers,” stated Mikhaelle Schiappacasse, associate at regulation agency Dechert.
“Nonetheless, the problem is for companies which have traditionally operated within the institutional investor area to transition to the retail investor area. For instance, it’s fairly fast in Luxembourg to arrange a non-retail ELTIF however there’s a sure overlay for those who’re focusing on retail buyers which makes the arrange course of extra time consuming.
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“In the event you’re promoting to retail buyers you might want to adjust to MiFID necessities round coping with retail purchasers and most non-public fund managers will not be arrange to do this, as they’re used to the lighter contact necessities of coping with institutional purchasers.”
Whereas fund managers might not be utilizing ELTIFs to focus on retail buyers, they nonetheless could also be utilizing them to broaden their distribution channels, Schiappacasse added.
Learn extra: ELTIF 2.0 presents “fascinating alternatives” for personal credit score
“I believe fund managers with no retail consumer base are utilizing the ELTIF construction to market these funds to wealth administration agency clients, as a result of it permits them to have entry to a broader, much less institutional investor base,” she stated.
ELTIF 2.0 is an replace from the unique ELTIF construction launched in December 2015, which was not very talked-about as a result of an absence of flexibility and restricted vary of eligible investments.
