We talked to Gerd Kommer and Robin Binder about the opportunities and risks ELTIFs offer. Getty Images / Johannes Kroemer / NAO / Getty Images / JacobH / Gerd Kommer Invest
ELTIFs have received a new regulatory coat of arms. While the funds were previously only accessible to investors with portfolio assets of 100,000 euros and a minimum investment of 10,000 euros, the requirements have relaxed significantly.
Many investors are therefore wondering whether an investment is worth it now. We asked ETF specialist Gerd Kommer and Nao manager Robin Binder whether ELTIFs could be an alternative to ETFs.
ELTIFs (European Long-Term Investment Funds) have recently been subject to new regulatory requirements. While the funds were previously only available to investors with portfolio assets of 100,000 euros and a minimum investment of 10,000 euros, the investment requirements have now been significantly relaxed. Many investors are therefore wondering whether the funds are now an alternative to ETFs.
Background: ELTIFs invest, for example, in infrastructure projects such as wind and solar parks or in private equity investments, i.e. unlisted companies. The hope of many: a higher return than on the stock market and more diversification for the portfolio.
“In fact, you cannot compare ELTIFs with ETFs. ELTIFs are actively managed funds, while 99 percent of all ETFs are passively managed,” explains German investment banker and author Gerd Kommer. In his book “Sovereign Investing”, Kommer writes about building wealth with ETFs.
Fund management is behind the investment decisions of an ELTIF, while most ETFs track a specific securities index. “Perhaps the regulatory changes for ELTIFs that have just come into force will result in an increase in sales, but ELTIFs are in no way an alternative to ETFs – neither in terms of substance nor in terms of their previously very low market significance,” Kommer continued.
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