The European Commission has unveiled its proposed amendments to the European Long-Term Investment Fund regime on November 25, following extensive consultation with members of the investment industry. The changes are intended to make the framework more attractive to asset managers and especially retail investors for a fund framework that has hitherto struggled to gain traction.

The ELTIF rules were introduced in December 2015 to encourage private investment in long-term assets such as physical infrastructure, notably from individual as well as institutional and professional investors. As of the beginning of October 2021 just 57 ELTIFs with around €2.4 billion in assets had been established across Europe, with Luxembourg the most popular domicile home to 26 funds, followed by France, Italy and Spain.

Many asset managers have complained that the original regime was overly complex and inflexible, discouraging them from using it to offer alternative strategies to high net worth and mass affluent investors. The revamp of the ELTIF rules is intended to remedy these issues and to boost private investment in real assets, with the added benefit of contributing to economic recovery from the impact of the Covid-19 pandemic.

It is also intended to complement other measures to extend the EU Capital Markets Union to boost access by companies and long-term investment projects to stable, sustainable and diverse sources of funding, and has been put forward as part of a package of measures under the Commission’s updated CMU action plan.

The Commission proposes that projects eligible for investment by ELTIFs need no longer be located within the EU and clarifies that they may pursue a global investment mandate. It provides a definition of ‘real assets’ to include infrastructure, intellectual property, vessels, equipment, machinery, aircraft, rolling stock, immovable property, rights attached to or associated with real assets such as water, forest and minerals, commercial property, education, counselling, research, sports or other facilities, and accommodation including senior residents and social housing. It also sets out a definition of simple, transparent and standardised securitisation under the EU’s 2017 legislation.

The proposed revision seeks to streamline the approval process for ELTIFs and clarifies that its AIFM is not required  to have its registered office in the ELTIF’s home member state or to carry out or delegate any activity there. It would lower the minimum investment value of real assets to €1 million, and specify the scope of eligible securitisations of residential property, commercial and corporate loans as well as trade receivables.

The revised regulation would waive or simplify requirements including diversification rules and borrowing limits for ELTIFs marketed exclusively to professional investors. For retail investors, the restrictions remain but have become more flexible. The maximum exposure of a retail ELTIF to securities issued by or loans granted to any single portfolio business rises from 10% to 20%; the 20% threshold also applies to single real assets and eligible securitisations that meet the EU’s Simple, Transparent, and Standardised criteria.

The revised regulation completely removes the previous minimum investment restrictions for retail investors: an initial minimum investment threshold of EUR 10,000 and a maximum 10% exposure threshold for retail investors with financial portfolios of less than €500,000. It also clarifies that employees of an ELTIF manager should not be considered as retail investors for the purposes of a fund the firm manages.

The proposals meet a key demand of industry members by authorising ELTIFs to operate as funds of funds that may invest in EU alternative investment funds investing in assets eligible under the regulation, as well as master-feeder structures, subject to additional reporting and other requirements. They also provide that management groups, affiliated entities and their staff may co-invest in ELTIFs run by the manager, subject to compliance with conflict of interest rules.

Once the draft amending regulation has been adopted by the European Parliament and EU Council – which could happen in the first half of 2022 – the changes will come into effect  six months after its publication in the EU’s Official Journal.

The Commission’s proposal for revision of the ELTIF regulation is available at

Feel free to get in touch with our investment funds team for more information.