Insurance EuropeInsurance Europe
EC should make European Long-Term Investment Funds more attractive to long-term institutional investors

Insurance Europe has today published its response to an inception impact assessment conducted by the European Commission on the revision of the European Long-Term Investment Funds (ELTIF) Regulation. The Commission’s objective in developing ELTIFs is to attract investment from institutional and private investors to increase the amount of private finance available for European companies.

The insurance industry supports the Commission’s proposals to reduce barriers in the ELTIFs legal framework. Insurers are Europe’s largest institutional investors and require access to a range of assets that provide attractive returns and portfolio diversification. However, because the ELTIF legal framework has a one-size-fits-all design, ELTIFs offer institutional investors less flexibility and are less likely to meet their investment needs than other alternative investment funds.

Europe’s insurers therefore encourage the Commission to refine ELTIFs to make them more attractive for institutional investors and to remove restrictions that prevent any significant interest from the insurance industry. This would require revisions to:

  • Fund design – ELTIFs should not be limited to closed-end funds. They should instead be able to offer regular subscription and redemption possibilities at appropriate frequencies.
  • Portfolio composition and diversification – ELTIFs should be refined to provide more flexibility and targeted investor protection, in particular for thresholds on portfolios of financial instruments and in regard to their strict and restrictive diversification requirements.
  • Eligibility of investment assets – The scope of eligible assets should be expanded to allow for better diversification and liquidity of the fund.
Published 19 October 2020