Luxembourg is prepared and has a key role to play in ensuring the success of the new European Long-Term Investment Funds (ELTIFs), which came into being this week, according to the Association of the Luxembourg Fund Industry (ALFI).

ELTFIs have been established by the European Commission in a bid to give new impetus to the continent’s economic recovery.

“The objective of the EU in setting up ELTIFs was to boost smart, sustainable and inclusive growth,” says Denise Voss (pictured), Chairman of ALFI. “Take-up of the new funds may be a gradual process, but we believe that Luxembourg has the in-depth experience and expertise required to support fund promoters wishing to launch ELTIFs, and we are ready to assist them.

“To articulate the essential role of investment funds for the global economy is an important part of the ALFI 2020 Ambition. Luxembourg has practical solutions for ELTIFs, the Luxembourg legal framework offering a wide range of solutions to fulfil the needs of ELTIFs, their managers and investors.”
 
ELTIFs are an initiative of the European Commission under its Capital Markets Union plan. They are a pan-European regime for Alternative Investment Funds (AIF) which channel the capital they raise into European long-term investments in the real economy in order to achieve growth and create jobs.
 
The ELTIF represents a milestone in the development of the cross-border European long-term funds business. Their long-term focus distinguishes them from most existing investment vehicles and they are therefore particularly suitable for institutions such as pension schemes and insurance companies with long investment horizons, as well as complementing and diversifying individuals’ savings portfolios. 
 
Like the funds subject to the Alternative Investment Fund Manager Directive (AIFMD) legislation, they must have an authorised alternative investment fund manager, but like UCITS, their pan-European marketing ‘passport’ allows them (under certain conditions) to be sold to individual investors who may not necessarily be classified as professional or sophisticated.
 
“The leading position of Luxembourg as a true cross-border and fund distribution hub will greatly serve the development of ELTIFs,” says Voss.