NOTE
The 3
rd
of February 2021
The Danish Government's response to the review of the European
long-term investment funds (ELTIF)
The ELTIF framework has so far not been a major source for financing
long-term projects in Denmark, as there are currently no ELTIFs.
The Danish Government therefore support a review of the rules to under-
stand whether they are fit for purpose. Firstly, it is relevant to ask the fun-
damental question whether the lack of attractiveness of ELTIFs is because
they are not suited for the vast majority of retail investors in the EU. Sec-
ondly, it is relevant to ask if professional investors prefer alternative invest-
ment funds (as defined in the AIFMD) compared to ELTIFs. If ELTIFs are
to compete with AIFs as the chosen vehicle for illiquid infrastructure in-
vestments, the ELTIF regulation should be flexible enough to be able to
cover a wide range of strategies and investor types, and it should be possi-
ble to manage ELTIFs commercially.
Investing directly in long-term illiquid assets requires a long-term commit-
ment from the investor. Only few retail investors have the commitment and
investment horizon for such long-term investments, and the product is
therefore not well suited for their needs. Instead, it should be explored how
to target retail investors indirectly via investments from pension funds.
However, if ELTIF is to target retail investors in the future, we need to
preserve a strong focus on investor protection. In particular, investor pro-
tection rules at the same level as in the MiFID regulation should apply in
full to ELTIFs, ensuring strong and coherent investor protection across all
types of retail investment product in the EU. The current rules on access
for retail investors should also be maintained.
Regarding the characteristics of ELTIFs, changing the fundamental char-
acteristics significantly would not be of any purpose in our view. ELTIFs
should continue to have long-term investments at its core and not allow
shorter-term investments to make up a large share of the portfolio.
In addition to these key points, the Danish Government have submitted an-
swers to the specific questions in the Commission consultation paper.
The Danish Government look forward to our continued dialogue regarding
the future of the ELTIF regulatory framework, and we will gladly assist the
Commission if further information are of request.