Illiquid assets, intermediaries for and against selling them to retail investors

Is it an opportunity or not for small savers to have real assets in their portfolio? That is, investments in the world of the unlisted, be they equities or bonds? According to what they promise (diversification on decoupled assets, high returns, etc.) they could help in the search for yield. But up to now they have been the prerogative almost exclusively of institutional investors, and even among high-end clients (private banking) to whom the main operators have for some time now submitted various solutions (Fia, Eltif and others) they do not exceed 1% of portfolios. Among the factors that work against this: illiquidity of subtotals, potential volatility, rigidity, complexity and above all a riskiness that is not within everyone's reach. Yet back in 2019 with Demos 1, a non-reserved closed-end Fia, Azimut was the first company in Europe to allow small savers to invest in this market in small steps (thresholds of EUR 5,000) . Since then, the company has a record in Eltifs with over 20 products and an amount invested in them of around one billion.

Pushing towards a greater penetration of these investments among retail investors came Eltif 2.0 (European long-term investment funds), which introduced greater flexibility by reducing the minimum amount of the entry threshold, allowing indirect investments through funds but above all exit windows with Nav enhancement. "This change broadens the investable universe and allows the launch of evergreen funds," explains Paolo Proli, Amundi Sgr's co-general manager, "i.e. open-ended investment products with a perpetual duration, which allow investors to subscribe and redeem their capital periodically throughout the life of the fund, under predetermined conditions. Thus, we are witnessing a trend of democratisation of private markets, supported by the evergreen Eltifs that are particularly suited to retail investors seeking greater flexibility, both in terms of access to the product and in exit methods, while remaining in a context in which the underlying assets are largely illiquid'. It is precisely in the wake of this innovation that UniCredit (on an advisory basis), Banca Sella, Credem, and Deutsche have opened up to retail customers, and they are gradually starting to do so at AllianzBank, Banca Generali and Fineco. "Allianz Bank has always adopted a gradual and responsible approach to illiquid products, such as Eltifs and Pir alternatives, always careful to maintain the focus on a type of clientele consistent with these solutions, which are not for everyone," the company emphasises. - Initial experiences, conducted on selected clusters of clients and financial advisors, have allowed us to gather valuable feedback over time. Today, on the strength of this expertise and thanks also to the possibility of offering evergreen and semi-liquid structures, we are about to make a fund available to our clients with a leading foreign partner". "We are working to expand the range - echoed by Banca Mediolanum - with semi-liquid and evergreen Eltif 2.0 private markets funds. An opportunity that we will reserve for customers with large assets with Wealth Care Premium advanced advisory service"..

The estimates

According to the latest forecasts by the rating company Scope, the volume of European Eltifs could settle between EUR 65 and 70 billion by 2027, with at least 80 new products set to debut in the Old Continent in the next 12 months. This already follows a record number of new Eltifs coming to market in 2024. Private equity, infrastructure and private debt dominate the offering. These are some of the highlights of the latest survey of a large number of asset managers and distributors conducted by the rating agency Scope.

Currently 150 Eltifs from 74 different managers are registered in Europe. In 2024, 55 were launched. Scope estimates the total volume of these funds at EUR 20.5 billion at the end of 2024, an increase of 38% (EUR 5.7 billion) compared to the end of 2023.