By Stephanie Buhagiar Camilleri - Senior Technical Expert, Investment Services Supervision, MFSA
Eligible Long-Term Investment Funds (ELTIFs) are EU-regulated alternative investment funds established to channel capital into long-term investments, including infrastructure, real estate, and other real economy projects. Originally introduced under Regulation (EU) 2015/760, the framework has been significantly enhanced through the ELTIF II Regulation (EU) 2023/606, with the objective of strengthening its attractiveness and usability for a broader range of investors while continuing to support sustainable economic growth.
The revised regime introduces a more flexible and market-oriented framework, addressing key barriers identified in the original regime and facilitating greater participation from both institutional and retail investors.
Diversification and Concentration Rules
ELTIF II enhances the attractiveness of the regime by introducing greater investment flexibility. In particular, the minimum allocation to eligible long-term assets has been reduced to 55%, allowing managers increased discretion in portfolio construction. In addition, diversification limits have been recalibrated, permitting exposure of up to 20% to a single asset or qualifying portfolio undertaking. These changes are intended to support more efficient portfolio management while maintaining appropriate risk diversification.
Retail Investor Access
Under ELTIF II, access for retail investors has been significantly broadened and simplified. The removal of the previous €10,000 minimum investment threshold represents a key development in improving accessibility. At the same time, the framework maintains a strong focus on investor protection through enhanced disclosure requirements and suitability assessments.
Increased emphasis is also placed on liquidity features, requiring managers to carefully align redemption mechanisms with the fund’s underlying investment strategy and investor profile. Distribution is further facilitated through alignment with MiFID II requirements, enabling broader cross-border marketing and access via established investment platforms. Safeguards, including appropriateness assessments in non-advised scenarios, remain in place to ensure that retail investors are adequately protected. Overall, the revised framework seeks to strike an appropriate balance between accessibility and investor protection.
Qualifying Portfolio Undertakings, Eligible Assets and Restrictions
ELTIFs primarily invest in “qualifying portfolio undertakings,” typically comprising unlisted companies or listed small-cap entities engaged in real economic activity. Eligible assets include equity, debt instruments, loans, and real assets with identifiable intrinsic value.
To preserve their long-term investment nature, ELTIFs are subject to a number of structural safeguards. These include restrictions on short selling, the limited use of derivatives for hedging purposes only, and defined borrowing limits. Such measures are designed to ensure alignment with the long-term and stable investment profile underpinning the ELTIF framework.
Transparency Requirements
Transparency and investor protection remain central to the ELTIF regime. ELTIFs are required to publish a comprehensive prospectus containing clear pre-contractual disclosures on investment strategy, associated risks, costs, and liquidity characteristics. This is complemented by ongoing reporting obligations covering performance and portfolio composition.
Where ELTIFs are marketed to retail investors, a Key Information Document (KID) must be prepared in accordance with the PRIIPs Regulation, ensuring that investors are provided with concise, standardised, and comparable information to support informed decision-making.
Local Framework
In Malta, the MFSA has established a structured and efficient framework for the authorisation and supervision of ELTIFs, aligned with the revised ELTIF II regime. Earlier in 2026, the Authority further strengthened this framework through the issuance of its ELTIF Guidance Note (March 2026) and corresponding updates to the Investment Services Rules, ensuring consistency with the updated European framework.
Under the revised regime, ELTIFs may also be established as Notified AIFs, subject to an authorisation “top-up” to address the additional requirements set out in the ELTIF Regulation. This approach provides additional flexibility while maintaining robust regulatory oversight.
Overall, the ELTIF II framework represents a significant evolution of the original regime, enhancing its attractiveness, flexibility, and accessibility while preserving strong safeguards for investor protection. ELTIFs are required to provide clear, comprehensive, and ongoing disclosures throughout their lifecycle, ensuring a high level of transparency and supporting informed investment decisions.
