EU investment plan would boost innovation in Eltifs market

Investors could benefit from more innovation in the long-term investment funds market following an agreement by the European Council and the European Commission to set up such a fund to kickstart the eurozone economy, a French MEP has said.

Alain Lamassoure, a member of the negotiating team, said: “On the very day that commission president Jean-Claude Juncker presented his investment plan for Europe, we have agreed on a structure to attract the savings of both individual and professional investors to finance long-term investments in the EU.”

Eltifs are designed to boost investment in Europe’s economy by funding infrastructure and research projects across the continent and will be open to pension funds, insurance companies and professional and retail investors.

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The funds are designed to be used for long-term investment, but to protect retail investors the negotiators have agreed to redemption rules, meaning they will have enough liquid assets to return an investor’s money.

Retail investors will have to invest at least €10,000 (£8,000) in one or more funds.

Liz Field, chief executive of the Wealth Management Association, said: “Creating jobs and growth is a priority for the EU, and Eltifs could play an important part in funding long-term investment projects.

“We welcome the recognition of the potential role that retail investors can play in supporting the EU’s growth initiatives.”

The plan now needs to be endorsed by the economic and monetary affairs committee of the European Parliament, the full parliament itself and the member states.

Adviser view

Carl Melvin, of Renfrewshire-based Affluent Financial Planning, said: “There is already an outlet for this because there are already infrastructure funds available, so they would have to compete with those.

“It would all be down to the cost, how much risk is involved and who is managing them. They would have to demonstrate good return on capital and good management.”