European Long Term Investment Fund (ELTIF)

The European Long Term Investment Funds (ELTIFs) 2015/760 EU regulation provides a framework for Alternative Investment Funds, that specifically invest in long term investments such as social and infrastructure projects, as well as real estate, across the European Union. The objective of the regime is to promote investment by insurance and pension funds, by both professional and retail investors, as a non-banking source of finance. Since the launch of ELTIFs in 2015, there has been minimal growth in the market, with assets under management (AuM) less than €2 billion, and approximately 27 ELTIFs in total. The lack of uptake led the European Commission to launch a review of the regulation in 2021, to establish the causes of the failure and improve the activeness of ELTIFs. In June 2020, the Capital Markets Union’s High-Level Forum recommended a review to broaden the scope of eligible assets and reduce potential barriers to entry. The current regulation stipulates that ELTIFs will not undertake in the short-selling of assets, and will not enter into securities lending and borrowing transactions if more than 10% of the assets of the ELTIF are affected.

ISLA is working with members and policy makers to help broaden the scope of application of the regime, which may encourage adoption more widely.