In comparison to some other European countries, including Luxembourg and Germany, investors in the Netherlands appear hesitant to embrace the new generation of Eltif funds at the moment. Questions to private banks and wealth managers in the Netherlands reveal a restrained level of enthusiasm.
Within the Dutch private banking sector, there is a growing interest in Private Markets. However, Eltif funds do not seem to be the immediate priority when it comes to investing in unlisted companies. InsingerGillissen, the Dutch part of Luxembourg-headquartered Quintet Private Bank, underlined the duty of asset managers to find suitable solutions, taking into consideration laws and regulations.
The complexity of Eltif funds extends beyond the structure alone; other critical factors also play a role, said an InsingerGillissen spokesperson. For many clients, Private Markets still represent a relatively new asset class, and recent developments in financial markets have made some clients reluctant to commit for the long term. Moreover, Eltifs remain just one of many options for investors with professional status.
Unfavorable terms for ‘old’ Eltifs
Van Lanschot Kempen and ING expressed reservations about the current Eltif regulations. Van Lanschot Kempen has not offered Eltif to private banking clients due to unfavorable conditions. However, with the introduction of Eltif 2.0 regulations in January, expecting further clarity in March, they are showing proactive interest. ING, on the other hand, introduced Eltifs for high net worth customers last autumn, where initial reactions have been positive, it said.
Jurgen van Wijngaarden, executive director of business management responsible for product development at Van Lanschot Kempen, believes that the Eltif 2.0 update is likely to see more extensive use, providing retail investors with easier access to private markets.
“The new Eltif 2.0 regulations are more interesting,” he said. “Formally, these came into force in January, but the European Commission has yet to decide on a comprehensive package of standards that include liquidity. Clarity on this is expected in March.”
Wider rollout expected later
‹Because this determines the conditions you can offer to a customer, most providers will wait for this. A broader rollout, including in the Netherlands, will probably follow afterwards.›
However, ING does not see an increasing demand for this specific product but does notice a rising interest in Private Markets in general.
“Because of democratisation and improved accessibility of Private Markets, on the other hand, we do see an increasing interest in investing in Private Markets, and with interest, we follow these developments, also, but not only, in the field of Eltifs,” an ING spokesperson said.
The reticence in the Netherlands can be attributed to several factors. ING stresses that Eltif funds are operationally complex for distributors, and larger assets have more flexible fund solutions than Eltifs. In addition, the closed nature of Eltif funds, where assets are tied up for long periods, can deter investors. The emergence of Evergreens, more flexible and with more options for investors, also contributes to the lack of enthusiasm for Eltifs.
Complexity and liquidity
It is expected that with Eltif 2.0 and wider options, supply will increase, and Private Markets investments will become more mainstream among retail investors in the long run. Further regulatory development plays a crucial role in this process. However, it remains essential to consider the complexity and limited liquidity of private markets when making investment decisions.
Van Wijngaarden expects the Eltif 2.0 update to succeed and be widely used to make private market investing more accessible to private investors. “Several parties have already indicated they are going to deploy Eltif2, including distributors who are now going to offer their clients more access to these private markets, or for the first time.”