ELTIF 2.0 now published in the OJEU

Today, 20 March 2023, regulation of 15 March 2023 amending the Regulation for Long-Term Investment Funds (ELTIFs), also known as ELTIF 2.0, have been published in the EU Official Journal. The regulation is available here (in English).

The amendments include a broader scope of eligible assets, a simplified definition of ‘retail assets’, which include lighter retail investor requirements, and an increased market capitalization threshold.

More specifically, the threshold eligible investment asset threshold is lowered from 70 % to 55 %, meaning that ELTIFs have more flexibility when it comes to portfolio composition and diversification. In addition, the borrowing limits of ELTIFs have been raised up to 50 % of the ELTIF’s net asset value instead of the 10 % and 20 %.

Further, applicable for retail investors, the initial investment requirement of EUR 10,000 is removed alongside with removal of the 10 % cap on a portfolio’s exposure to the ELTIF. ELTIFs are not only made more attractive to retail investors, but also professional investors, as ELTIFs solely marketed to professional investors may now leverage 100 % of the fund’s capital instead of the original 30 %.

ELTIF 2.0 also introduces master-feeder structures and a flexible legal framework for fund-of fund structures, providing for fund of fund ELTIFs to now invest in AIFs other than ELTIFs, EuSEFs and EuVECAs.

What’s next: ELTIF 2.0 will enter into force on 10 April 2023. From this date, there will be a 9-month transition period (ending on 10 January 2024), during which only existing ELTIFs will be able to opt into the new regime early by submitting a notification to their national competent authority.

Tags:  Retail Investors