ELTIFs: Volume rises to more than 16 billion euros
European Long-Term Investment Funds, or ELTIFs for short, are among the most important innovations in the financial industry. Private markets have long been closed off by high financial and regulatory hurdles. “With the adjustments in favour of investors, the EU has opened the doors wide”, says Michael Patzelt, Head of Sales for the DACH region at Moventum. “ELTIFs are the optimal vehicles for this, which is also reflected in the strong increase in volumes.”
After an increase of around 50 per cent to about eleven billion euros by the end of 2022, the market should probably easily reach or even exceed the 16 billion euro mark this year. “In 2024, even faster growth could be on the cards, which will then help ELTIFs gain further popularity”, says Patzelt. The number of ELTIFs issued will also rise sharply.
One reason is certainly the changed portfolio composition, according to Patzelt: The quota for permissible forms of investment was reduced from 70 to 55 percent. In addition, the diversification quotas were adjusted. A single tangible asset may now make up 20 percent of the total portfolio instead of ten percent as before. Furthermore, the permissible leverage ratio for products that are also distributed to non-professional investors was increased from 30 to 50 percent. “All of this will further advance ELTIFs”, says Patzelt.
With 44 ELTIFs domiciled here, Luxembourg is the frontrunner in terms of products. This is followed by France with 21 products, while ten ELTIFs were launched in Italy and two in Spain. The distribution is also reflected in the volume: Luxembourg has the largest share of ELTIF investments with around 5.8 billion euros (as of 2022).
In terms of new investments, the focus is increasingly on ELTIFs in which private investors can also invest. The share of products in the total market that can be sold to both private and professional clients rose from a good 50 to around 60 percent in 2022 compared to the previous year. “Advisors can thus open up markets for their clients that offer new assets that were previously difficult to invest in”, says Patzelt.
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