Eltif 2.0 is the easiest route to private markets but caution is in order

The young European Eltif industry (EUR 28.5 billion and 244 products), based on assets by asset class, also sees private debt as the largest category, with 33% of total Eltif assets and 74 dedicated products. In terms of assets in second place is infrastructure (28%), then private equity (26%) with the largest number of products (82). "However, the fastest-growing segment," explains Justina Deveikyte, co-founder and managing partner of Novantigo Evergreen DataHub, "is multi-asset Eltifs, which grew by 93% in the last year (data to Q3 2025, ed.), followed by infrastructure with 68%. While the market continues to be dominated by traditional managers, we are seeing a big change with the entry of more and more private equity firms such as Kkr, Eqt and Blackstone'.

In Italia, according to Scope at the end of 2024 (no other data are available, not even from Assogestioni), Italian investors held EUR 3.5 billion in Eltifs, making Italia the second largest market in Europe: around 40 new Eltifs were launched in 2025. New asset managers that have set up bases in our country include Ares, Blackstone, Eqt, Hamilton Lane, Invesco, Kkr, Morgan Stanley, Muzinich & Co. and StepStone.

Among the innovations of the past year is the distribution of Eltifs on online platforms such as Fundstore where Eltif 2.0 can be purchased independently, allowing retail investors to access private markets with thresholds starting at EUR 1,000. Among the solutions on Fundstore's platform are those of Amundi, BlackRock, Apollo and JPMorgan. Also independently, one can invest in Eltif 2.0. with Trade Repubblic's platform starting at one euro, while with Scalable Capital one can access BlackRock's Eltif Private Equity fund with ten thousand euros.

The attraction of Eltif 2.0. lies in the so-called periodic liquidity windows, with limits explained in the prospectus of each product. A partial or total exit from the investment in themes shorter than the natural maturity is possible. Buying private debt, or shares of an unlisted company with Eltif 2.0 or other private debt funds, on the one hand opens up high profit opportunities, but on the other hand - it must be made clear - it is quite different from investing in bonds and listed shares due to the lower liquidity of portfolio investments. The dynamics of selecting and managing investments are more complex and require patient capital. Different risks can be taken than in public markets. This is why "financial education is crucial in explaining to those who approach these products both the complexity of the investment processes of private market funds that are different from those of listed funds," explains Federico Vettore, European head of Morgan Stanley Im's private markets division, "and explaining the nature of these products for which a long time horizon is indispensable. That is why even when exit windows are provided, as in the case of evergreen funds, it is good to understand that the maximum disinvestment limits imposed on investors by the regulations of funds of this type exist to mitigate the risks associated with excessive disinvestment given the illiquid underlying, which would otherwise have to be sold off to create cash. When we invest in private credit every transaction is a proprietary analysis and thorough due diligence with a well-detailed cost that goes into the final price of the product. Transparency must be a priority'. With the Eltif 2.0 regime, the regulator has placed very precise constraints on the manager (investment limits and strict obligations regarding suitability and liquidity) but has also allowed the retail investor to be able to liquidate his investment more easily. "But beware the valuation of the Nav in a semi-liquid fund is different from that of one with listed securities," adds Carrier, "and especially in the initial phase the manager must minimise cash drag

Cash drag is the risk that, especially in the initial stages of launching an evergreen fund or similar product, may occur if the manager raises capital without being able to invest it quickly in illiquid assets. In fact, it is the negative impact on total returns caused by holding cash or low-yielding instruments, rather than investments in high-yielding private assets, due to the time required to deploy capital. In Eltifs, some time may elapse between the raising of capital and the actual deployment, and if the manager is not prepared for the deployment, this can be a distinguishing factor between performing and underperforming managers. The new Eltif 2.0 allows for semi-liquid structures. However, managers have to keep some liquidity by regulation to meet redemption requests, which can increase cash drag. 'Similarly, exit windows when possible must not allow for disorderly investor exits,' Carrier adds. Because while it is true that funds promise periodic liquidity, by investing in illiquid assets they should not be forced to sell assets at a time of stress, risking eroding value by penalising long-term investors'.