RTS ELTIF 2.0 Update

The Commission Delegated Regulation (EU) 2024/2759, which supplements the revised ELTIF 2.0 regime (ELTIF RTS), was published in the Official Journal of the EU on 25 October 2024 and takes effect on 26 October 2024. This supplement specifies new responsibilities for ELTIF managers, including product lifecycle management, minimum holding periods, redemption policy requirements, cost disclosure, AIFM/AIFMD Reporting, and risk-liquidity assessments.
This long-awaited update aims to facilitate retail investor access to ELTIF products while providing greater flexibility in asset selection.

Key Takeaways from ELTIF 2.0:

Lifecycle Procedures: ELTIF managers shall consider the lifecycle and characteristics of assets to be aligned with the ELTIF’s lifecycle.

Use of Derivatives: Solely economically suitable derivatives for hedging purposes are allowed.

Minimum Holding Period and Redemption Policy: Must align with the ELTIF’s structure and target investor type (primarily retail investors), with maximum redemption limits specified in Annexes I & II. A transfer request matching mechanism is allowed, with details disclosed in a clear, non-technical manner for retail investors.

Matching Requirements: Content requirement for full or partial matching of transfer requests to ensure fair and orderly transactions, considering the fund’s liquidity and redemption policies.

Risk and Liquidity Requirements: Outlines criteria for determining the liquid assets percentage in an ELTIF to meet redemption requests. These criteria consider factors like the ELTIF’s lifecycle, investment strategy stability, and potential market conditions impacting redemptions.

Cost Disclosures: Costs borne directly or indirectly by investors must be disclosed following the standardized approach defined in Article 12.

KID Requirement: Key Information Document (KID) required for retail distribution to provide appropriate transparency and customer protection.

At LPA, we understand the importance of staying up-to-date with the regulatory landscape. The Capmatix AM product line facilitates key fund reportings, including AIFM/AIFMD reporting, and document generation to support compliance.

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