This whitepaper provides an insightful overview of the evolving landscape of European Long-Term Investment Funds (ELTIFs), focusing on the significant regulatory changes under the ELTIF 2.0 regime, effective from January 10, 2024.
Context: ELTIFs, introduced in 2015, aimed to foster long-term investments, especially in the green economy. However, limited success under ELTIF 1.0 led to regulatory reforms, culminating in the ELTIF 2.0 regime.
ELTIF Fund Overview: ELTIFs, part of the EU’s alternative investment fund landscape, are accessible to both professional and retail investors. Key changes in ELTIF 2.0 include removal of minimum investment requirements for retail investors, alignment of suitability tests with MiFID II standards, and introduction of master-feeder structures.
Timeline for Implementation: The ELTIF 2.0 regime took effect on January 10, 2024. Funds authorized before this date can choose to remain under the ELTIF 1.0 framework or transition to the ELTIF 2.0 regime. The implementation of Regulatory Technical Standards (RTS) is expected by October 2024.
Investments and Limits: ELTIFs have specific rules on asset eligibility and diversification. ELTIF 2.0 expands the range of permissible assets, including real assets, green bonds, and STS securitizations, while ensuring a balanced portfolio composition and diversification.
Redemption Policy and Liquidity Management Tools (LMT): ELTIFs must adhere to structured redemption policies and LMTs. Transparency towards both investors and NCAs is emphasized, including detailed disclosures in the prospectus.
Transparency/Reporting: ELTIFs must disclose costs, liquidity management tools, and matching mechanisms in the prospectus. Annual reports extend beyond AIFM requirements, providing detailed financial and asset information.
Want to know more about the significant amendments proposed in the ELTIF 2.0 regime effective January 10, 2024? Download the below Whitepaper by filling the form.
