GClosed real asset funds were once popular with private investors in Germany. However, due to high costs and a lack of transparency, they have fallen into disrepute and have lost their importance. Because there was also a lack of products in Europe that combined long-term asset accumulation and the financing of long-term growth projects, the European Union raised the “European Long-Term Investment Fund” (Eltif) in 2015 as a direct investment fund, especially for private and smaller institutional investors the baptism. In October, however, the Commission began a process of consultation on the reform, not least because it was dissatisfied with its success. So far, only 28 funds have been launched across Europe, managing a total of less than two billion euros.
The suggestions for improvement made so far are mainly directed against rigid guidelines. For example, there is a requirement to no longer specify a term or to be able to buy and sell shares continuously. It is also required that more than 30 percent may be invested in funds, including equity funds, and that fund of funds structures be permitted. “A fund of funds offers greater diversification and is also cheaper in the traditional guise,” says Philipp Lennertz, founder of the Hamburg multi-family office Lennertz & Co. Due to the restrictions of the Eltif, there is a risk, especially in the private equity sector, that in an Eltif “only the leftovers would be put”.