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ELTIF 2.0: New era for Asset Managers to embrace opportunities for long-term investments

Each year, the Luxembourg financial center reasserts its leading position in the global financial market. Luxembourg’s reputation as a leading investment fund domicile backed by quality service among clients is built on the expertise, innovation and know-how which is clearly evident as a leading domicile for ELTIFs in Europe.


Introduction
 

The growth in appetite for alternative investments among private individuals and their wealth managers over the past few years has outpaced that of institutional investors in relative numbers. Specifically, between 2018 and 2021, private clients and family offices boosted their share in global private equity fund raising by over 5%. Even in the face of 2022’s economic uncertainties, and a dip in their share of the total PE fundraising volume, these investors still poured in around €22 billion, matching the previous year’s figures as per Invest Europe data.$

High net worth individuals (HNWIs) are increasingly pursuing investments that offer long-term capital appreciation, preservation of capital for generations to come, and positive impacts on social and environmental issues. As such we have seen a rise in open ended Alternative Investment Funds (AIF) to meet these needs. There has been a noticeable uptick in the launch of regulated funds in the form of ELTIFs and/or Luxembourg based UCI Part II funds over the last few years. The revised ELTIF regime or as commonly referred to as ELTIF 2.0, offers a regulatory product regime which aims to address some Regulatory challenges also play a heavily significant role, as these funds are especially subject to higher scrutiny from regulators to protect non-institutional investors. Open-ended funds, just like traditional funds, are also subject to AIFM supervision, however necessitate stricter compliance and oversight. ELTIF offers a regulatory framework (EU distribution passport) which will allow more access to Private Capital funds retail investors. In this brochure, we have outlined the main changes and consequences for fund managers as they are about to launch such products. At Deloitte, we understand your challenges and the opportunities with ELTIF 2.0. Our team of experts are able to assist you through the fund lifecycle to make an impact where it matters. We hope you enjoy the read.

ELTIF 2.0 Key Changes
ELTIF 2.0 Impact
ELTIF 2.0 Services we offer

  • Tailored product strategy to align with ELTIF 2.0 framework and ensure competitiveness
  • Market and competitive analysis to position the fund effectively
  • Custom liquidity models aligned with investment strategy and redemption features
  • Portfolio management techniques for deal warehousing and investor conversions
  • Target operating model design for efficient governance, compliance, and fund management
  • Robust liquidity management frameworks for open-ended fund structures
  • Service provider selection and onboarding for seamless operations and compliance
  • Comprehensive operational setup for fund governance, distribution, and investor reporting
  • Strategic distribution planning and compliance with EU and local regulations
  • Cross-border marketing support utilizing the EU passport for wider retail investor access
  • Enhanced governance for accurate and compliant NAV calculations
  • Transparent pricing strategies aligned with investor expectations and regulatory standards
  • Comprehensive risk management frameworks with regular stress testing and compliance monitoring
  • Alignment with ELTIF and AIFMD requirements to safeguard investor interests
  • Holistic tax advice on fund structure, legal form, and tax incentives for ELTIFs
  • Tailored tax solutions for investors, portfolios, and fund managers

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