The European Parliament has passed legislation to set up European long-term investment funds (Eltifs) designed to make it easier for insurance companies and pension funds to invest in long-term projects such as infrastructure, intellectual property or research results.
MEPs approved the project by 546 votes to 93, with 28 abstentions. The rules, which have been already been informally approved by the member states, must now be officially endorsed by the European Council before they can progress.
Eltifs are designed to encourage investments in asset classes that are too illiquid to be included in existing fund structures, which typically have flexible redemption rights.
Eltifs will have to apply for authorisation, have a regulated structure and play by uniform rules to give assurance that they would offer long-term and stable returns. The European Parliament added conditions to prevent them from being invested in speculative assets and to ensure that any retail investors putting money into them are properly informed and protected.
Alain Lamassoure, MEP for south-west France and a proponent of Eltifs, said that the vote by the European Parliament would not only boost long-term investment, but was also the first step in building the proposed capital markets union.
Last month the European Commission published a green paper asking for input on what the priorities should be for the proposed capital markets union, and what should be done to encourage the take-up of Eltifs (IAR, 18 February, EC green paper could change treatment of long-term investments).