IMA welcomes European long-term investment fund proposals

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The Investment Management Association has welcomed proposals for European long-term investment funds, saying the UK would be an “ideal domicile” for such products.

The European Commission has drafted a new investment fund framework designed for investors who want to put their money into companies and projects for the long term. These ELTIFs would only be allowed to invest in companies that need money committed for long periods of time.

ELTIFs would be open to all types of investor across Europe, subject to certain requirements under EU law, and would have to meet the requirements of the Alternative Investment Fund Managers Directive to provide adequate protection for its investors.

IMA director of authorised funds and tax Julie Patterson says: “It is welcome that ELTIFs may be accessible to retail investors as part of a diversified portfolio of retirement savings. The UK would be an ideal domicile for such funds and their managers given our efficient and effective tax and regulatory structures.”

ELTIFs will be authorised, closed-ended funds for a fixed term with no early redemption rights, although their units can be listed and traded on exchanges or other recognised trading facilities.

However, Patterson points out that retail ELTIFs would need a PRIP KID, or packaged retail investment products key information document, and notes that the implementation of these has been set back.

“Therefore, we echo concerns of the wider European fund management industry about the ongoing delays to the adoption of the PRIP KID,” she says.

“Moreover, suggestions that the KID regulation should include restrictive rules on eligible assets, such as transferrable securities, underlines the need for there to be a joined-up debate on appropriate protections for retail investors without limiting their investment needs.”