(Finance) – The Council of the European Union adopted his position for improve the regulation of European long-term investment funds (ELTIFs), with the aim of facilitating long-term investments in the real economy. Considered a pillar of the Capital Markets Union, ELTIFs are a tool introduced by the EU in 2015 to facilitate investment – through alternative investment funds – in longer-term activities such as social and transport infrastructure projects (energy, hospitals, social housing), real estate and small businesses.
The updated regulation intends to make these investment funds “more attractive to wealth managers and investors” And “develop the number of such funds investment in Europe. “Now that the Council has adopted its position, it is ready to start negotiations with the European Parliament to agree on a final version of the text, once the latter has defined its position.
Since 2015, the ELTIF regulatory framework defines eligible assets and investments, portfolio diversification and composition, leverage limits and marketing. Due to constraints in the distribution process and stringent portfolio composition rules, it was launched a limited number of ELTIFs and only in four Member States (France, Italy, Luxembourg and Spain), due to notable.
The revision of the regulation should unlock the untapped potential of ELTIFs by making the making such funds more attractive to wealth managers (updating the scope of eligible assets and investments, portfolio composition and diversification requirements, liquidity lending and other fund rules, authorization requirements, investment policies and operating conditions of ELTIFs) and allowing retail investors to invest more easily in ELTIFs (in particular removing the minimum threshold investment of 10,000 euros).
In its position, the EU Council highlighted three priorities: channel more funding to SMEs and long-term projects, also by removing the existing restrictions on the composition of the ELTIF portfolio, in particular for those distributed exclusively to professional investors; strengthen the role of retail investors by making ELTIFs more attractive to them and removing barriers to entry that do not take into account each investor’s profile and objectives; maintain high standards of investor protection and provide retail investors with all relevant information so that they can make informed decisions.