ELTIFs in wind and solar parks: opportunities and risks for investors – a financial expert explains

ELTIFs in wind and solar parks: opportunities and risks for investors – a financial expert explains

According to a report by www.businessinsider.de, ELTIFs (European Long-Term Investment Funds) have previously been associated with high investment hurdles for many investors. But now this is changing, as private investors can now also invest in these funds. The funds invest in long-term projects in Europe, such as the real economy, roads, bridges, energy networks and wind farms. The previous regulatory hurdles of ELTIFs, such as a minimum investment volume of 10,000 euros and a portfolio asset of 100,000 euros, have deterred many potential investors from investing in these funds.

The new regulatory framework means that the minimum investment amount and the minimum portfolio assets are no longer required, which means that asset managers can now set up ELTIFs in which private investors can invest from one euro. In addition, shares can be redeemed before the end of the fund term. Nevertheless, ELTIFs are still designed for long-term investors and have an average lock-in period of around seven years.

The costs for ELTIFs vary depending on the provider and are often structured into management fees and profit-sharing. In general, ELTIFs offer the possibility of higher returns and more diversification, but also increased risk.

In terms of the market, this opening of ELTIFs to private investors could lead to an increased flow of investments in long-term European projects, which could have positive effects for both the real economy and investors. The removal of regulatory hurdles and the possibility of a broader portfolio diversification could encourage more private investors to invest in ELTIFs and thereby build a more stable financial basis in the long term.