Recalibrate Eltifs to make them work, says Efama

On the 01/26/21 at 12:19PM


Adrien Paredes-Vanheule

The European fund and asset management association (Efama) has responded to the European commission’s consultation on improvements to the European long-term investment fund regime (Eltif).

Since the Eltif fund regime was implemented in December 2015, only 28 Eltifs - including one run by French group Tikehau Capital since last April - have been established for meagre total assets below €2bn. Efama therefore concludes the Eltif regulation has failed to meet its objective of boosting European long-term investments in the real economy. Despite the failure, the EU asset management association still believes in the potential of the Eltif regime but not without a few amendments.

In its response to the European commission, Efama makes the case for a more open-end structure at core of Eltif funds, which remain closed-end funds currently. This would translate into removing current limitations to Eltifs’ life cycle and introducing appropriate redemption terms. Efama also recommends broadening the scope of Eltifs’ eligible investable assets to European venture capital and social entrepreneurship funds as well as to non-listed financial start-ups.

Besides, Efama defends the lowering of the current €10m threshold for investments in “real assets”, with a view to broaden choices for managers to consider smaller investment projects. The association pleads for removing quantitative limits and allowing investments into Eltifs as from €1.000 as well while the tax neutrality of Eltifs should be guaranteed.

Commenting on the proposals, Federico Cupelli, senior regulatory policy adviser at Efama, said: “Profound changes are necessary to make Eltifs an EU product of choice and help deliver on some of the CMU’s objectives. These include promoting more participation in less-liquid, real asset markets, as well as allowing both institutions and individuals to invest a part of their wealth over the long-term and diversify their exposure into private markets. In this regard, we advocate a recalibration of the regulation’s asset eligibility requirements, minimum investment amounts and adequate tax incentives”.