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How revamped rules are setting the stage for retailisation of European private markets

Reforms to the European Long-Term Investment Fund (ELTIF) could open up more private markets opportunities for retail investors, but what is changing? And what can they offer to investors?

Key takeaways

  • New rules are coming into force in early 2024 to attract more retail investors to ELTIFs, offering them new investment opportunities in private markets.
  • The changes include removing investment minimums and caps on how much retail investors can commit to ELTIFs, a broadening of the range of investments ELTIFs can make and rules that allow the creation of more diversified structures via funds of funds.
  • The new ELTIFs will have features designed to protect retail investors, such as diversification requirements and leverage limits, in addition to the already existing cooling off period.

Retail investors could be set to benefit from new opportunities to access private markets as far-reaching reforms to the European Long-Term Investment Fund (ELTIF) — known as ‘ELTIF 2.0’ — come into effect in early 2024. 

Launched in 2015, ELTIFs were designed for both professional and retail investors as a way of channelling more non-bank funding to Europe’s companies and projects through private equity, infrastructure, private credit and real estate investments.

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However, as it became increasingly clear that the original ELTIF regulation  was not fulfilling this objective, the European Commission initiated a review in 2020. It concluded that legislation governing these funds had turned out to be too restrictive and prescriptive for firms to be sufficiently interested in launching ELTIFs and for investors to participate.¹ 

Indeed, to date, fewer than 100 ELTIF funds have launched, all with relatively modest assets under management and concentrated in just a handful of markets – Luxembourg, France, Italy and Spain.²

Source: ESMA, Scope Group, as of December 2023

What’s new in ELTIF 2.0: more investment options and liquidity, no more minimums 

The review prompted sweeping changes to the rules governing ELTIFs, approved by the European Parliament earlier this year. When they come into effect in January 2024, ELTIF 2.0 rules will allow for a broader range of investments including other funds and fund of funds structures while offering a liquidity option for investors.

The revisions to the framework also remove the €10,000 minimum investment per ELTIF and the cap of 10% of a retail investor’s capital on ELTIF investments. All these will open up ELTIFs to a wider retail investor base.

Overall, the reforms aim to increase the range of investments and reduce barriers for retail investors. The result could be up to €100 billion of new investment in ELTIFs over the next five years, according to the Alternative Investment Management Association.³

ELTIF Comparison
ELTIF (as introduced in 2015) ELTIF 2.0 (changes from 2024)
Strict guidelines on eligible investments Opportunity for minority co-investments and secondary transactions
Investment cap of 10% for retail investor portfolios equal or smaller than €500,000 Removal of investment cap for retail investor portfolios
Leverage restrictions of 30% of NAV for retail investors Leverage extended to 50% of NAV for retail investors
Close-ended structure Close-ended or semi-open ended
Min. 70% in private equity, credit, loans, real estate Min. 55% in private equity, credit, loans, real estate
Minimum investment: €10,000 Removal of minimum investment
Source: GSAM 2022

Four key benefits of ELTIF 2.0 

Some of the advantages that ELTIF 2.0 will offer retail investors include:

Funds of funds as an access point

This is particularly valuable to investors with relatively small sums to invest and without the time or expertise to select suitable managers. Previously, ELTIFs only allowed for funds that qualified as ELTIFs themselves; the new rules will allow for the creation of ELTIF funds of funds that can also invest in other EU alternative funds and UCITS, which are a type of security funds, operating under a European legal framework.⁴ This will offer investors an easier route to an adequately diversified portfolio and allow them to leave the research and individual fund manager selection to skilled and experienced teams.

The potential for liquidity

ELTIFs are designed to be long-term investments. However, the new ELTIF regime recognises that retail investors may sometimes need liquidity before the end of the fund’s life. It therefore allows for redemptions after an as-yet unspecified minimum holding period. It also introduces the possibility of selling ELTIF shares via the secondary market — this envisages the development of a matching mechanism for buyers’ and sellers’ transfer requests.⁵

Access to new investment types

The new rules expand the asset range for ELTIF, giving retail investors access to previously unavailable investments. These include green bonds, minority co-investments, certain types of securitised assets such as mortgage securities, corporate and commercial loans. Additionally, listed qualifying companies with a market capitalisation of up to €1.5 billion are now included, which is three times the limit prescribed by ELTIF 1.0.⁶⁷⁸ The EU also wants to see financial innovation and has therefore removed some of the limitations on investments in financial companies to include fintech businesses.⁹

Further, the definition of what qualifies as “real assets” has been broadened and the €10 million minimum investment size for eligible real estate projects has been removed.¹⁰ Such real assets now include immovable property, for example, highways or electric grids, as well as social infrastructure like retirement homes and hospitals.¹¹

These investment types are in addition to the assets that were available from the start, such as private equity, private credit, real estate and infrastructure. Among those to have launched an ELTIF under the current regime are some well known firms in the private markets space. BlackRock, for example, has reportedly raised close to €1 billion across two ELTIFs in private equity and infrastructure, with plans for further funds targeting private equity.¹² Others include Partners Group, which is launching a second private markets ELTIF¹³, while Neuberger Berman, Amundi and Eurazeo have also all raised ELTIF funds.¹⁴

Access to investments beyond the EU

The new rules also clarify the ability of an ELTIF to invest in non-EU assets.

This could open up retail investor access to different kinds of investments and regions. North America, for example, has broad and deep private markets opportunities, while investments in assets such as non-EU renewable energy installations, or sub-sea fibre-optic cables could provide promising portfolio diversifiers.¹⁵ 

ELTIF 2.0 does not, however, permit investments in jurisdictions that the EU has identified as a high risk for money laundering or that it has listed as not co-operating on international tax rules.

Protecting retail investors

There are clear benefits for retail investors in the new ELTIF rules. However, as with any investment, investing in these funds is not without risk. ELTIFs are not as liquid as, for example, public market investments. The funds are designed to be long-term investments and retail investors considering ELTIFs should ordinarily expect to lock up their capital for the ELTIF term. 

Retail investors more used to public markets may also find that the reporting and disclosure are less detailed in ELTIFs compared with that from listed company investments.

However, retail ELTIF 2.0 funds will come with several investor protection mechanisms in place—some of which are not available to ELTIFs for professional investors. Among the most important are:

  • Concentration limits which means that no more than 20% of a fund’s capital can be invested in a single investment¹⁶; diversification requirements such as a 20% limit on capital deployed in securitisations and a 10% aggregate risk exposure for over the counter derivative transactions¹⁷; and a limit on leverage of 50% of the ELTIF’s net asset value.¹⁸
  • Provision for liquidity before the end of the ELTIF fund life as described above.¹⁸
  • In line with existing European consumer protection laws, a revocation right is granted during the two weeks following the conclusion of the subscription document. During this period, retail investors can cancel their subscription without charge if they change their minds.¹⁸
  • A requirement for retail investors to receive a clear and straightforward explanation of the risks and complexities relevant to the ELTIF fund.¹⁸

Accessing ELTIF 2.0 opportunities

These reforms should make ELTIFs a more attractive and accessible investment option than they currently are. However, they may still be far from straightforward and remain cumbersome for the retail market. This is why Moonfare is bringing the same seamless digital experience it provides for professional investors to those wishing to invest in ELTIFs.*


Why invest in alternatives?

ELTIFs offer retail investors an access route to private markets, an asset class that has historically only been open to institutional and professional investors, but that is now starting to open up for eligible individuals. Private markets can offer investors a range of benefits, including a way of diversifying portfolios, low volatility relative to public markets, the potential for higher returns than in most other asset classes and a premium to compensate for the illiquidity inherent in these types of investment – they are best seen as long-term financial commitments. However, bear in mind that private equity also presents risks, such as liquidity and funding challenges, which differ from those encountered in public equity.

Given the EU established ELTIFs to provide non-bank financing to important projects that will improve the region’s competitiveness, they could provide retail investors with some particularly interesting and usually inaccessible opportunities. These might include infrastructure development, advancing sustainability and exposure to European hidden champions. There could also be tax benefits for some investors – Italy, for example, offers tax incentives for ELTIF investors.


* Access is subject to eligibility. Moonfare retains the right to set its own minimums on a per-jurisdiction basis. Access and commitment may vary between jurisdictions and will be subject to regulatory restrictions.

Important notice: This content is for informational purposes only. Moonfare does not provide investment advice. You should not construe any information or other material provided as legal, tax, investment, financial, or other advice. If you are unsure about anything, you should seek financial advice from an authorised advisor. Past performance is not a reliable guide to future returns. Don’t invest unless you’re prepared to lose all the money you invest. Private equity is a high-risk investment and you are unlikely to be protected if something goes wrong. Subject to eligibility. Please see


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