In 2015, the European Parliament's Regulation (EU) 2015/760 launched ELTIFs with the aim to channel investments into long-term projects and businesses in need of capital. Designed for investors seeking long-term investment opportunities beyond traditional stock markets or UCITS funds, ELTIFs offer diversification and risk-spreading benefits. With a focus on real assets, ELTIFs enable investments in sectors such as infrastructure, renewable energy, and real estate. By catering to retail and professional investors, ELTIFs have the potential to become a complementary source of financing for the European real economy.
Recognizing the need for improvements, the ELTIF Regulation was revised, with Regulation (EU) 2023/606 and will apply from 10 January 2024. The proposed changes aim to enhance the appeal and effectiveness of ELTIFs, while addressing the shortcomings of the original framework. Key amendments include broader eligibility criteria for assets, increased flexibility in fund rules, improved access for retail investors, and harmonization with MiFID II regulations. These changes aim to stimulate investor interest and encourage asset managers to explore the potential of ELTIFs. The entry into force of the revised Regulation is supported by Luxembourg in the sense that ELTIF will be exempt from the subscription tax and will have access to a broader range of available legal structures.