European Long Term Investment Funds (ELTIFs)

• ELTIFs

ELTIFs are EEA based funds which focus on investing in long-term and illiquid assets such as venture capital, private equity, private debt, real estate and infrastructure. Their domicile and authorisation will be within each relevant EEA country using the ELTIF framework. There has been increasing interest and activity in this type of fund. The ELTIF features described below apply since 10 January 2024 – i.e. date of application of the new ELTIF 2.0 Regulation. ESMA has also developed regulatory technical standards (RTS) specifying when derivatives will be used solely for hedging the risks inherent to other investments of the ELTIF, the requirements for an ELTIF’s redemption policy and liquidity management tools, the circumstances for the matching of transfer requests of units or shares of the ELTIF, certain criteria for the disposal of ELTIF assets, and certain elements of the costs disclosure, which are applicable since 26 October 2024.

A type of EU domiciled regulated alternative investment fund (AIF)

ELTIF is a label on top of regular national product laws such as:

• SIF, SICAR, RAIF for well-informed investors

OR

• SCS, SCSp, Part II UCI for all investors

Closed ended but early redemptions may be permitted subject to specific conditions set out in Art. 18 of the ELTIF Regulation, as supplemented by the ESMA RTS

At least 55% in eligible investments such as:

• real assets; 
• green bonds; 
• equity, quasi equity, debt instruments issued by or granted to a qualifying portfolio undertaking; 
• simple, transparent and standardised securitisations (STS) where the underlying assets consist of long-term exposures; and 
• units, shares, interests in ELTIFs, EuVECAs, EuSEFsn UCITSn EU AIFs managed by EU AIFMs investing in “eligible investments” only (fund-of-funds strategy allowed) 

Limits and restrictions apply

Diversification requirements and concentration limits apply 

• limit of 20% of its capital in a single qualifying portfolio undertaking, single real asset, or units or shares of any single ELTIF, EuVECA, EuSEF, UCITS or EU AIF managed by an EU AIFM or 10% UCITS eligible assets issued by a single body)
• not more than 30% of the units/shares of a single ELTIF, EuVECA, EuSEF, UCITS or EU AIF managed by an EU AIFM

Do not apply where ELTIF is marketed solely to professional investors

Yes. Must apply for authorisation to its home state regulator

• No more than 50% of NAV if the ELTIF marketed to retail investors; 

OR 

• No more than 100% of NAV if solely marketed to professional investors

Can avail of an EEA marketing passport for both retail and professional investors

• An EEA authorised AIFM 
• AIFMD rules on a depositary apply

• Institutional investors and retail investors with no minimum financial portfolio requirement and no minimum investment amount
• MiFID aligned suitability test and PRIIPS key information document (KID) for retail investors

Will depend on form, national jurisdiction and activity