More chance with Eltif but for small investors the risk must be explained very well

For small investors, opportunities to diversify their portfolios in the private market are expanding with the arrival of Eltif 2.0 (European long-term investment funds) offered by traditional intermediaries and new entrants.

This new version makes investing more flexible (lower minimum entry thresholds, more asset types and 'semi-liquid' funds). The promise is diversification into decoupled assets and high returns. Until now, they have been the exclusive preserve of institutional investors and even among the high-end clients to whom they are offered (Eltif 1.0 and other Fia) they do not exceed 1% of portfolios. Why? Illiquidity, volatility, complexity and a riskiness that is not within everyone's reach work against them. Already in 2019 with Demos 1, a closed-end non-reserved Fia, Azimut was the first company in Europe to allow small savers to invest in this market (thresholds of 5,000 euro) and still maintains a record with over 20 products and an amount invested of around one billion. But not everyone thinks this way.

Among those against the extension to retail customers is the Bmp group. "In the Banca Aletti world, we have always preferred to launch Eltif solutions and, as of this year, Eltif Evergreen, characterised by greater liquidity," explains Roberto Arosio, head of investments and wealth management at Banca Aletti. "For customers with large assets (Hnwi or Uhnwi) we also have Fia and Alternative funds. With regard to the retail world, experience highlights the need for considerable investment, in terms of training and information, to make these instruments better understood both at the sales stage and post-sales; furthermore, the retail target market, considering the levels of experience and knowledge required and the illiquidity of the instruments, is limited and does not make distribution sustainable". The manager advocates the use of more retail-friendly vehicles. In this sense, there seems to be an initial opening on the regulatory side with SIAs (savings and investment accounts), which provide for the possibility of investing in these solutions.

The position of Scalable Capital and Trade Repubblic, two platforms that have been providing semi-liquid Eltifs for a few months, is different. 'We opted for the Eltif BlackRock Private Equity for several reasons,' explains Alessandro Saldutti, country manager Italy at Scalable Capital. 'First and foremost, because we think that our client, who is predominantly young and has the right risk profile, can have a valid opportunity to diversify into an asset class that has historically been the best performer, thanks to its low correlation to public equity markets. Furthermore, we opted for a leading company that operates without distinction between types of clients but gives everyone the same opportunities and with a competitive cost level with an initial deposit of 10 thousand euro and any additional ones from euro upwards. Then we explain well that there are no certain returns, that these in private markets can be higher but expose you to more risk, and that you cannot disinvest for the first two years. Thereafter it is only possible to disinvest during quarterly windows.

Option provided by Trade Republic with two different Eltifs (Apollo and Etq). Through the new investment platform, customers can invest from as little as EUR 1 thanks to the fractioning of shares, with the option to sell monthly on Trade Republic's internal marketplace. 'Investors will not be able to request the redemption of their shares until the end of the minimum holding period of three months,' explains Luca Carabetta, country manager for Italy at Trade Republic, 'thereafter, quarterly redemptions are expected to be equal to the net asset value (Nav) of each calculated on the last calendar day of the quarter.