This paper evaluates whether European Long-Term Investment Funds (ELTIFs) are the most appropriate vehicle for expanding retail investor access to private markets under the EU’s Savings and Investments Union (SIU) agenda. While ELTIFs are increasingly promoted as the preferred framework for channelling household savings into long-term productive investments, questions remain regarding their market uptake, investor benefits, and suitability for retail investors.
The paper examines whether ELTIFs offer meaningful advantages over existing fund structures and assesses the effectiveness of the revised ELTIF 2.0 regime. It compares ELTIF investor protection mechanisms, including liquidity management, costs, disclosures, and marketing rules, with those of UCITS and alternative investment funds.
The analysis finds that, despite recent reforms, ELTIFs do not fully address the challenges that private market investments pose for non-professional investors. While the framework broadens access, important concerns remain regarding product complexity, liquidity constraints, and the extent to which retail investors can properly assess the risks involved.
The paper concludes that expanding access should be accompanied by stronger safeguards, clearer and more understandable disclosures, and closer monitoring of investor outcomes to ensure that retail investors are not steered towards illiquid products without a sufficient understanding of the associated risks.
BETTER FINANCE recommends that regulators focus on investor outcomes by closely monitoring returns, improving transparency around the risks of private assets, and ensuring that retail investors are not steered towards illiquid products that they may not fully understand.
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