On 15 February 2023, the European Parliament adopted the regulatory reform of the European long-term investments funds (ELTIFs) regulation to make these ELTIFs more attractive to asset managers and retail investors by facilitating their investments in the real economy and encouraging private capital flows toward more environmentally sustainable investments.

ELTIF regulation was published in the Official Journal of the European Union today, 20 March 2023, and will be effective as from 10 January 2024.

Since coming into force in 2015, the existing ELTIF regulation has offered long-term investment opportunities for professional and retail investors across Europe. However, due to significant constraints on the distribution process and stringent rules on portfolio composition, only a limited number of ELTIFs have been launched to date.

Here are some of the key changes. For more details, you can read the full alert: Europe: ELTIF version 2 is approved on Baker McKenzie’s InsightPlus.

  • New investment rules – the scope of eligible investments and the definition of ‘real asset’ have been expanded. On a high level, some of the changes involved the following aspects:
    • Assets and investments located in non-EU countries
    • Securitized assets
    • Green bonds
    • Investment in financial undertakings
    • Eligible portfolio undertakings
    • Other investment funds
    • Minority co-investments
    • Portfolio composition
  • Differentiated rules for professional and retail investors – there are now fewer restrictions for professional investor ELTIFs, and the access to retail investors has been simplified
    • ELTIFs that are only marketed to professional investors will benefit from more attractive and specific rules with respect to the diversification and composition of the portfolio concerned, the concentration limits and the borrowing of cash.
    • The updated regulation brings several improvements to ease the retail investors access to ELTIFs, as follows:
      • Some barriers have been alleviated, such as the EUR 10,000 initial minimum investment requirement, which will be removed.
      • To ensure a high level of protection of retail investors, a suitability assessment should be carried out irrespective of whether the units or shares of ELTIFs are acquired by retail investors from distributors or managers of ELTIFs, or via the secondary market.
      • Under the updated regulation, ELTIF managers will be able to provide for the possibility of an early exit of ELTIF investors during the life of the ELTIF, subject to the ELTIF manager putting in place a policy for matching potential investors and exit requests specifying the transfer process, the role of the manager of the ELTIF or the fund administrator, the periodicity and duration of the liquidity window during which the units or shares of the ELTIF can be exchanged, the rules determining the execution price and proration conditions, the disclosure requirements, and the fees, costs and charges and other conditions related to such a liquidity window mechanism.

By expanding the scope of eligible investment assets, updating the definition of “real asset,” creating differentiated rules for professional and retail investors, simplifying the retail investor access to ELTIFs and facilitating the investor’s exit, the revamped regime should address the prior shortcomings and design a better future than ELTIF version 1.


Laurent Fessmann is a Banking & Finance partner specializing in the formation and structuring of Luxembourg investment funds. He is a former managing partner of the Luxembourg office and the current co-chairman of the Baker McKenzie's Global Funds Steering Committee.


Catherine Martougin is a partner in the Funds & Asset Management team of the Baker McKenzie Luxembourg office. Catherine represents private equity funds, real estate funds, debt and infrastructure funds and other financial institutions.