ELTIFs Everything you need to know as an investor

16.04.2024 16 Reading Time

klimaVest: ELTIF Grafik

ELTIF stands for European Long-Term Investment Fund. Since 2015, this financial instrument has also offered retail investors the opportunity to invest in infrastructure and other long-term tangible assets.


The most important facts at a glance:

  • The EU launched ELTIFs (European Long-Term Investment Funds) for sustainable and inclusive growth in Europe in 2015. With ELTIFs, both institutional and retail investors have the opportunity to promote the European real economy with their capital, for example, in the form of infrastructure projects.
  • Investors invest in a wide range of projects – with a secure set of rules from the EU: sustainability, digitalisation, the energy transition and innovations can thus be supported in a targeted manner with private capital.
  • The recently adopted ELTIF 2.0 legal framework significantly reduces previous barriers to entry, so that the financial instrument is to become even more accessible to retail investors in particular
  • Once again: information is key. Each ELTIF must have a product description and brochure.

ELTIF: European Long-Term Investment Fund

In 2015, the EU launched the European Long-Term Investment Fund. ELTIFs aim to foster sustainable and inclusive growth in Europe. Cross-border collaborations and appropriate financing instruments are needed to overcome challenges such as advancing digitalisation or social transformation.

With ELTIFs, for example, sustainable mobility, green electricity grids and socially relevant buildings are financed.

But what exactly are ELTIFs, which assets do they invest in, why are they particularly suitable for retail investors and how can they contribute to sustainable development?

What is an ELTIF? an overview

The abbreviation “ELTIF” stands for European Long-Term Investment Fund and means exactly that. This form of investment is used to promote long-term investments in the European real economy and, in particular, also includes retail investors who previously did not have the opportunity to invest in infrastructure projects.

The ELTIF is a relatively new investment framework in the EU. To protect investors and companies, investment fund managers must follow strict rules when launching ELTIFs. 

ELTIFs are intended to make illiquid investments accessible to retail investors - e.g. infrastructure or tangible assets such as wind farms. The focus is on transparency and investor protection: previously, they were allowed to invest a maximum of 10 percent of their net assets, which should be at least 100,000 euros. However, the recently adopted “ELTIF 2.0” regulation relaxes these rules and aims to bring new impetus to the ELTIF market.

ELTIFs at a glance

ELTIFs are:

  • alternative investment funds (AIFs)
  • long-term investments
  • invest in tangible assets, infrastructure or medium-sized companies
  • diversified and strictly regulated to protect investors
  • can also be invested in by retail investors

ELTIFs are alternative investment funds (AIFs) and can be marketed throughout the EU. AIFs represent a particularly broad spread of risk and are subject to authorisation by the respective national supervisory authority and a reporting obligation.

How did the ELTIF come about? The history

ELTIFs are long-term in nature, but do not have a long history yet. This new investment vehicle is a creation of the European Union. It published the Regulation on the European Long-Term Investment Fund (ELTIF, Regulation (EU) 2015/760) on 29 April 2015 and, a few months later on 8 June 2015, the Regulation entered into force. The Regulation has been applicable in all European Member States since 9 December 2015. On 15 February 2023, the revised ELTIF Regulation was adopted, which finally entered into force on 8 April 2023.

The development of the ELTIF was an important milestone for the EU. With the long-term investment fund and other measures, the EU wanted to put into practice its action plan for a Capital Markets Union by 2020. The plan provides for smart, sustainable and inclusive growth that transcends borders. ELTIFs can contribute to this by steering investments into the real economy.

Why was an ELTIF necessary? The gap in the market

With the “ELTIF” vehicle, the EU closed a gap that previously existed between companies and retail investors. Until then, companies had mainly received funds from banks or institutional investors. The financing instruments of the European Member States were inconsistent and mostly not focused on long-term investments such as infrastructure projects. The money flow thus stopped at the borders, limiting the growth of funds and the opportunities for both projects and investors. 

Retail investors now also have access to asset classes such as equity holdings (private equity), debt financing (private debt) and infrastructure. The funds in the EU-wide regulated framework make it possible to link up demand and supply: the high financial requirements, especially for infrastructure projects on the one hand, and the financial resources of retail investors who are looking for good interest rates on the other hand.

What are the objectives of ELTIFs? The opportunities

The money can flow into a wide range of projects: sustainability, digitalisation, the energy transition and SME innovations all urgently require more capital. Direct investment actually brings more funds into the real economy. Previous private equity umbrella funds were expensive because they charged fees twice – ELTIFs are more direct. 

The European Union stresses the importance of long-term investments for the green transformation of infrastructure as part of its Green Deal. Environmental and climate protection, as well as challenges in the real economy arising from the COVID-19 pandemic, require financial resources in the public and private sectors – ELTIFs in particular are also expected to play an increasingly important role here. 

An ELTIF enables investments in infrastructure and SMEs. The approach also provides a harmonised EU regulation for public-private partnership projects. These are partnerships between the public sector, the real economy and the financial sector, which can result in concrete projects. “Public” is, for example, an order for road construction by the Federal Government, “Private” is the implementation (by road construction companies) - and also private financing (by retail investors).

Advantages of ELTIFs

  • First Europe-wide regulated access for retail investors to alternative investment funds (AIFs) off the stock exchange
  • Cooperation between the real economy and the financial markets
  • Participation of (retail) investors in the cross-border development of the European economy
  • Focus on assets that create social and economic added value
  • Transparency with clear performance as a booked security in the custody account

What does an ELTIF invest in? The long-term investments

What was previously not possible is now possible with ELTIFs. It opens up new areas of investment for retail investors by giving them access to so-called “private markets”. As “long-term” in the name suggests, ELTIFs can only invest in companies and projects that require long-term capital. 

Investments are made in asset classes in the form of tangible assets and infrastructure

  • Shares in companies/equity (private equity)
  • Loans/debt financing (private debt)
    • Real estate (especially with a social aspect, e.g. schools, hospitals, nursing homes, prisons)
  • Infrastructure (especially transport and energy):
    • Aircraft and airports
    • Ships and ports
    • Toll roads, car parks, parking meters
    • Power plants, renewable energy, waste disposal infrastructure
    • Telecommunication networks
    • Factories, machines

In addition, ELTIFs may invest in:

  • Tangible assets, the development of which requires long-term capital (at least 1 million euros) 
  • Intellectual property and other intangible assets (education, research, development)
  • Umbrella funds:
    • Other ELTIFs
    • European Venture Capital Funds (EuVECA)
    • European Social Entrepreneurship Funds (EuSEF) and
    • Certain infrastructure funds

Until now, such assets have only been accessible to institutional investors. The new form of investment is primarily intended to benefit EU citizens, EU companies, investors and managers.
The company shares are intended primarily to fund small and medium-sized enterprises (SMEs). 

The ELTIF Regulation provides for certain companies as "qualified portfolio companies":

  • non-listed companies or
  • listed small and medium-sized enterprises (SMEs) with a market capitalisation of up to 500 million euros
  • established in a Member State or a cooperative third country³
  • that may not be a collective asset or a financial undertaking (not an undertaking for collective investment)

What principles does an ELTIF follow? Criteria and rules

In order to safeguard retail investors while still providing access to infrastructure and tangible assets, the European Union has established strict rules for the quality of the ELTIF in the regulation of the same name.

Mechanisms for protecting private and retail investors are

Supervision and management

ELTIFs must be based in the European Union and be in the category of AIFs (Alternative Investment Funds). How AIFs differ from other funds is described in the next section. Each ELTIF and the relevant fund management company are subject to the approval of the respective supervisory authority

The fund manager must be authorised as an Alternative Investment Fund Manager (AIFM) and must appoint a depositary. The EU seal of approval and the licence – known as the European distribution passport – are then valid for all EU member states.

Status as a security

From a legal point of view, the ELTIF is a security. It is booked in a custody account at a price that is valued at least quarterly at the net asset value. This means that investors always get an up-to-date picture of their investment.

Eligible investment assets

The intention is for ELTIFs to invest in certain assets that generate economic and social added value, particularly in the EU. These are mainly tangible assets and infrastructure projects (see list under “What does an ELTIF invest in?”)

The 55 percent rule of European Long-Term Investment Funds (ELTIFs)

As the investment assets are long-term in nature, it may take several years for the ELTIF to invest all of the fund's assets. To avoid rushing investment decisions, a new ELTIF has up to five years to build itself up. Then, under the new ELTIF regulation, they will have to invest at least 55 percent of their funds in illiquid asset classes.  

The new regulation also increases the debt financing ratio from 30 percent to 50 percent. With the borrowed capital, funds can now – unlike before – not only make investments, but also secure their liquidity. As a result, ELTIFs may be open to higher potential returns.


The definition of the asset classes and the (modified) 55 percent rule are the essential elements for risk diversification. A maximum of 20 percent of an ELTIF should be invested in a single asset, such as a company. 

To avoid speculation, instruments with a leverage effect are restricted: derivatives may only be used to hedge capital; short sales and investments in commodities are prohibited.

Requirements for investors

Until now, anyone interested in an ELTIF had to have at least 100,000 euros in assets. Those who owned less than 500,000 euros were allowed to invest a maximum of 10 percent of their assets in a long-term investment fund. Many investors complained about this, as the regulation required them to invest 10,000 euros in an ELTIF – if they had sufficient assets – and thus had no opportunity for diversification.

With the new ELTIF reform, these barriers to entry no longer apply; investors no longer have to prove a minimum amount of assets or provide a minimum investment amount. This gives them the opportunity to distribute their capital across various investment products and thus reduce investment risks in a targeted manner.

Long-term nature

The precise meaning of “long-term” has been left open by EU regulators, but the fixed asset classes in which an ELTIF invests are by their very nature long-term - often more than 10 years, and sometimes even more than 50 years. For each ELTIF, a maturity date is set so that investors know how long their money generally remains committed in the fund. The fund matures on that specified date. In addition, maturity phases have been established for each ELTIF, e.g. 5 years.

Investors cannot withdraw their units before the end of the fund's defined maturity phase. However, due to the securities nature of the investment vehicle, some ELTIFs allow units to be redeemed by the management company. The prerequisite for this is that the fund is risk-diversified and that more than 55 percent of the capital is invested in assets. Both criteria must be reconfirmed each year on a key date.


Strict rules are in place, including for marketing to retail and professional investors and the prospectus. Communication includes the target portfolio (which asset classes should be invested in?), the depositary, the fund manager and the cost structure.

An overview of the rules

In summary, a fund qualifies as an ELTIF if it

  • is offered by an authorised Alternative Investment Fund Manager (AIFM) with depositary
  • is only invested in certain asset classes (especially infrastructure and tangible assets) – at least 55%
  • has a fixed term
  • provides transparent information about the illiquid nature of long-term investments
  • limits leverage and other risky/speculative techniques

How do ELTIFs differ from UCITS? A classification

UCITS are investment funds that invest in legally defined and regulated types of financial instruments. The abbreviation stands for “Undertakings for Collective Investments in Transferable Securities” (UCITS). 

Permitted investment assets for these, which are colloquially also known as mutual funds or securities investments, include, among other things equity – perhaps in the form of shares – bonds, financial market instruments or units in other UCITS funds. Many of the regulations for the relatively new ELTIFs are inspired by UCITS regulations. 

The main difference between ELTIFs and UCITS funds is the long-term nature. ELTIFs can and should invest at least 55% in asset classes that would not be compliant for UCITS, such as infrastructure projects. This is precisely why the ELTIF was invented: in order to channel long-term capital – including from private investors – into the real economy and thus meaningfully supplement the UCITS regulation. 

Due to its long-term nature, ELTIFs only have to calculate the net asset value (NAV) at least once per quarter. UCITS, on the other hand, carry out their calculations on a daily basis. However, the NAV of an ELTIF is only an indication of how the fund will perform over time. It is often not possible to sell at the NAV before the end of the term – and this is often ten years or more. A more frequent calculation of the unit value and a regular redemption of units to the fund company can be agreed within the framework of the ELTIF Regulation. 

ELTIFs connect two worlds: as an AIF (Alternative Investment Fund), it may invest in illiquid assets. Inspired by the rules of UCITS (mutual funds), it includes comprehensive investor protection mechanisms, thus also becoming available to private investors and bears the EU passport to be marketable throughout the European Union. 

ELTIFs may invest up to 50% of their portfolio in the assets eligible for UCITS (excluding financial derivatives). A maximum of 5% of the ELTIF’s capital may flow into the assets of a single issuing authority.

Who is an ELTIF aimed at? Target groups

An ELTIF is aimed at private and professional investors. This long-term investment fund is also the first to offer small investors the opportunity to invest in the real economy in the form of tangible assets and infrastructure. The terms “small investors” and “retail investors” are synonymous and defined in contrast to professional (or institutional) investors – they do not refer to the amount of assets.

Investor types 

  • Professional customers / institutional investors
    These are experienced customers such as banks, insurance companies, funds, public authorities, pension funds with securities portfolios of at least 500,000 euros
  • Semi-professional customers
    These invest at least 200,000 euros or are institutions or foundations under public law or state-owned municipal enterprises
  • Retail customers / small investors
    These are investors who are neither professional nor semi-professional customers 

Where and how to buy ELTIFs

Anyone wishing to invest in a publicly available ELTIF should first look at the product description and brochure, which are mandatory for each ELTIF. If the ELTIF is structured as a securities fund, it has an ISIN number beginning with the country code of the country in which the ELTIF is established. Luxembourg, France, Spain and Italy have established themselves as the home of most ELTIFs and have developed the best structures for them.

Banks are distribution partners for ELTIFs. Interested parties can obtain information there, subscribe to units and open a custody account or add the ELTIF to their current custody account. The fund management must be an authorised AIFM (Alternative Investment Fund Manager).

Potential returns of ELTIFs

Although the selection of ELTIFs is not very large yet, it is getting bigger. In 2021, there were only 57 approved ELTIFs across the EU.⁵ This was primarily due to the fact that fund investors first had to deal intensively with the new investment vehicle. 

The fund volume is now growing, because the market potential is large: by the end of 2022, the number of ELTIFs had already increased to 77 funds, according to the latest study by the Scope Group. Infrastructure projects will continue to require many billions of euros in the coming years. When the EU launched the long-term investment funds in 2015, it assumed that the financing of infrastructure projects in Europe alone would require almost two trillion euros by 2020 (2,000 billion euros). 

As the ELTIF is a vehicle that can be designed in a variety of ways, an investment is not associated with a general specific return expectation. As the financial instrument is still in its infancy, there is limited experience to date. But in principle, it can be said that the level of return depends on the fund, its strategy, structure, performance and terms. 

“The asset class in which the fund invests, as well as the investment conditions and the leverage ratio – i.e. the debt capital ratio – play a particularly important role,” says Axel Seider, Product Developer of klimaVest at Commerz Real.  

A long-term investment usually means less risk, but also less return than a short-term investment. Because ELTIFs invest over the long term, the returns tend to be less in line with the risk profile than speculative investments, for example. The return is “distributed” more across the investment period, as can be seen from the example of a renewable energy plant: the risky development period for a wind farm is only around 1.5 years – after that, the asset is held at a low risk for 10 to 15 years and wind is constantly “harvested”. 

Long-term investments become more independent of cycles, making them less risky, but also high-return. By contrast, investing in the short term is much more prone to cycles and external shocks. 

ELTIFs thus enable stable returns and can achieve attractive returns in the long term². This is mainly due to the demand for financing and the long-term nature of investments such as infrastructure projects. This means that ELTIFs can “be both a source of return and a stability anchor in volatile times,” says Dirk Holz, Chairman of the Board of Management of Commerz Real Fund Management S.à r.l.

The risk characterisation ratio: this is how safe ELTIFs are

The risk of ELTIFs lies primarily in their long-term nature. This fund vehicle is therefore not suitable for investors who cannot leave their money in illiquid assets in the long term. 

The risk indicator of a fund depends on its strategy and structure. In the product description, a value on a scale from 1 (low risk) to 7 (higher risk) is given. It indicates how likely it is that money will be lost because the market is performing differently than expected or the manager is not able to pay out to investors. 

The fund providers themselves are responsible for the classification. It is therefore advisable not to rely solely on a risk class. In the case of ELTIFs, it is primarily the assets that are being invested in, as well as the product characteristics, the market conditions and, if applicable, other risk factors that must be considered. 

ELTIFs invest in infrastructure assets. These are less cyclical and therefore less risky than investments that follow the economic cycle. In addition, they are designed to be longer-term than most other offers. Their borrowing is very limited, which reduces the leverage risk. Due to the European focus, there is generally also less country risk. 

The klimaVest ELTIF, for example, has a medium risk profile as it is long term in nature, invests in generally stable asset classes (especially renewable energies), has a very limited debt capital ratio and is traded as an open-end fund.⁶

As is customary for funds, an ELTIF also carries the risk of partial or total loss of the capital employed. This is unlikely, although possible; for example, if all the assets held by the fund perform badly because, for instance, the global economy collapses or completely unforeseen legislation is passed. Despite extensive currency hedging, a residual currency risk also remains. 

Things to consider:

  • How diversified is the fund? In principle, the larger the fund, the more diversified the investments.
  • In what type of investments (assets) does the fund primarily invest and how high-risk are these? For example, investments in power plants using fossil fuels such as oil or coal are no longer considered to be future technologies. Mobile assets such as aircraft and ships are cyclical and therefore riskier, whereas immobile assets such as power grids or solar parks are not affected by these cycles
  • How secure does the income from business operations or the business model of the assets appear to be?
  • How experienced is the fund management in the management of the portfolio assets?

Costs and terms of ELTIFs

The costs incurred for ELTIFs are similar to those of retail funds. The total costs consist of fees for the purchase and ongoing fund costs.

Purchase fees

  • Initial charge (earnings share)
  • Transaction costs, if applicable

Ongoing costs

  • Performance-based remuneration
  • Flat-rate fee
  • Portfolio transaction costs
  • Custody account management costs, if applicable

Compared to umbrella funds, ELTIFs are significantly more cost-transparent. They do not pay any additional fees to the target funds, i.e. they do not include double fee constructs.

Compared to private equity products, ELTIFs are at an advantage when it comes to tax. An ELTIF is not treated as an investment for tax purposes, but as a fund. Withholding tax is therefore payable. 


Each ELTIF ends after a set term defined by the fund management at the outset. The legislator has not specified any requirements for the term length. As a rule, investors cannot withdraw their capital from the fund before the end of the term. Fund managers can extend the term twice. 

However, for ELTIFs, there is the option of announcing a redemption of shares on a valuation day and redeeming shares under specific conditions on each banking day (the “valuation day”) either after the expiry of five years from the launch of the fund or, if earlier, from the date when specific investment restrictions are met. This varies from fund to fund. Investors can find out about this in the legally prescribed sales documents. 

ELTIFs in the magic square

The potential of ELTIFs in the magic square of investments lies particularly in the earnings potential and the possibility of a sustainable contribution to the real economy: the lack of liquidity of long-term investments is offset by attractive returns.


With European Long Term Investment Funds (ELTIFs), politics has taken a significant and promising step towards providing retail investors with access to markets previously reserved for large institutional investors.

With the new ELTIF Regulation, even more investors now have the opportunity to invest in the European real economy via ELTIFs – and thus contribute their capital to where it can make a big difference.

¹ The management company of klimaVest is Commerz Real Fund Management S.à r.l.
² Calculated using the BVI method (excluding initial charge, distribution reinvested immediately). The calculation of the performance scenarios can be found here. Statements on target returns and planned profit distributions are not reliable indicators of future performance. 
³ Prerequisite for classification as a cooperative third country:  
- Legislation does not allow money laundering and terrorism financing (according to FATF = Financial Action Task Force
- Has signed Article 26 of the OECD Model Tax Treaty with the country where the ELTIF is based and with the countries where it is to be marketed
⁴ www.commerzbank.de/wertpapier/de/research/fonds/fondsportraet/KLV100.html 
⁵ Fact sheet: 2021 CMU package - European Long-TermInvestment Funds (ELTIFs) (europa.eu)
⁶ www.klimavest.de/Downloads
⁷ https://www.cash-online.de/a/endlich-kann-der-eltif-sein-volles-potenzial-entfalten-644830/
⁸ https://www.scopegroup.com/dam/jcr:9b69aff6-a8d5-45ac-871f-8521633cedb1/Scope%20ELTIF%20Studie%20final.pdf