Solid growth of the ELTIF fund market
20 MAY, 2024
The amount of money invested in European Long-Term Investment Funds (ELTIFs) increased by almost a quarter in 2023 compared to the previous year, to €13.6 billion. According to Scope, assets under management in this vehicle are likely to reach EUR 30-35 billion by the end of 2026.
The number of ELTIFs increased by almost 25% last year, according to the latest annual survey of the European ELTIF market by Scope, Europe's leading rating agency, with new funds launching this year and more in the pipeline.
According to the report, 95 ELTIF funds from 41 different asset managers are registered in the EU. Last year, 20 were launched, slightly more than in 2022.
So far, 85 of the 95 ELTIFs have been actively marketed to investors. Total assets under management amounted to €13.6 billion at the end of 2023, an increase of €2.7 billion (24%) year-on-year.
The three largest funds - Meridiam Infrastructure Europe III SLP, klimaVest and GF Infrastructures Durables SLP - accounted for around a quarter of the total volume. The 10 largest vehicles accounted for almost half.
French investors have invested the most capital in ELTIF to date, to the tune of €4.7 billion at the end of last year, followed by investors from Italy (€3.3 billion), Germany (€1.9 billion) and Spain (€0.7 billion).
By asset class, fund volumes are evenly split between private equity (31%), infrastructure (31%) and private debt (30%). ELTIFs based on mixed strategies and invested in real estate account for the remainder.
The most active ELTIF providers are Amundi, Azimut, BlackRock, BNP Paribas, Commerz Real, Generali Investments, Muzinich, Neuberger Berman and Partners Group. The Luxembourg supervisory authority (CSSF) has the most ELTIF authorisations (60).
Extension of the ELTIF 2.0-compliant product portfolio
There are two reasons why growth in assets under management last year was not as strong as markets expected. First, the rise in interest rates last year drove investors away from alternative investments by offering attractive returns on conventional interest-bearing instruments.
Secondly, fund providers refrained from launching new funds in anticipation of the ELTIF 2.0 regulatory regime, which came into force on 10 January 2024. The new regulation simplified the product for providers and distributors. The final form of some of the new rules is still unclear, delaying the launch of some products.
The market remains confident that ELTIFs are the future of private market investments for broad groups of investors. The risk-return profile of the product will be decisive for its long-term success, although reliable performance data will only become available in the next few years.
Based on our extensive survey data and discussions with asset managers, we expect volumes to increase to EUR 30-35 billion by the end of 2026. At least 20 new ELTIFs are expected to come to market in the next 12 months.
