The European Fund and Asset Management Association (EFAMA) today shared its recommendations to the European Commission on measures to be taken to improve the European Long-Term Investment Fund (ELTIF) regime.

Very few ELTIFs were launched by professional investment managers since the Regulation became applicable in December 2015. Only around 28 ELTIFs have been established, with a low asset base (below 2 billion euros). From that perspective, the ELTIF Regulation has failed to meet its objective of boosting European long-term investments in the real economy.

However, EFAMA believes that the ELTIF regime if properly adapted can become a powerful tool to deliver on some of the Capital Markets Unions (CMU) objectives and represent an attractive vehicle for investors in a low-for-long interest rate environment.

EFAMA recommends the following key changes to the current regime:

• Turn ELTIF into an open-end structure alongside the existing closed-end one, by removing current limitations to its life cycle and by introducing appropriate redemption terms, and include adequate liquidity management tools.

• Broaden the scope of the current eligible asset provision to include other types of funds, besides ELTIFs, EuVECAs and EuSEFs, as well as non-listed financial start-up companies.

• Lower the current 10 million threshold for investments in real assets, thereby broadening choices for managers to consider smaller investment projects.

• Remove quantitative limits (i.e., 500.000, 10% of the investable portfolio and a minimum of 10.000) and allow investments into ELTIFs as from 1.000 to reduce supply-side constraints.

• Guarantee the tax neutrality of the ELTIF structure to make it a worthwhile investment tool.