Natixis Investment Managers is about to launch several so-called European Long-Term Investment Funds (Eltifs), through which retail investors can invest in private assets. Until now, these have been reserved primarily for institutional investors and family offices, but the revised Eltif 2.0 is changing this.

As Natixis confirmed upon inquiry, three new Eltifs are in preparation. All of them have so-called evergreen structures, and are therefore funds without a fixed term. One of the funds pursues a multi-private assets strategy, investing with different weightings in private equity and private debt, as well as in property and infrastructure. The other two vehicles are private equity funds, and are managed by the Natixis boutiques Mirova and Flexstone.

Natixis Head of Europe Patrick Sobotta is convinced that the retail markets are needed. „There is an enormous need for investment in Europe totalling over 1.5 to 2 trillion euros by 2030, particularly in the area of infrastructure,“ he says. In order to meet this need, the retail markets are indispensable, and more capital must be mobilised from retail investors. Natixis manages 1.2 trillion euros worldwide, of which just over 100 billion is invested in private markets.

However, the retail segment's share of this has so far been marginal. The old Eltif structures found little favour in the broader market. „This could now change, as an improved set of rules is meeting with growing pressure in institutional fundraising,“ says Michael Jäger, Head of Private Assets at Natixis IM in Central and Eastern Europe.

According to Jäger, managers of private assets are currently facing considerable challenges in fundraising with institutional investors. „Many of these large investors have already reached their target allocation for private assets and cannot increase it any further, partly for regulatory reasons,“ says Jäger. At the same time, traditional bonds are attractive again due to the rise in interest rates, and are therefore an interesting alternative.

In order to tap into new fundraising potential, many private asset managers are therefore increasingly focussing on the retail segment. According to Jäger, institutional investors manage around half of the world's assets. The other half is in the hands of retail investors. However, their share of private assets is close to zero. „If the industry succeeds in increasing this share to just 10% through Eltif 2.0 and targeted educational work, this would unleash enormous fundraising potential,“ says Jäger.

However, retail investors have in the past often had bad experiences with illiquid products, which has led to a certain degree of scepticism. For Jäger, it is therefore essential that retail customers understand exactly what they are agreeing to. Failure could significantly undermine confidence in the asset class. „Eltif 2.0 offers the necessary regulatory certainty, but it also requires providers to take a high degree of responsibility when dealing with the regulations, especially when setting minimum investment amounts,“ he says.

As the Eltif 2.0 regulations do not provide any precise guidelines, it is the responsibility of each asset manager to define an appropriate threshold in order to protect retail investors. According to Sobotta, comprehensive educational work is also essential to make the private asset markets accessible to a wider audience. „That's why we launched the Private Asset Academy. This platform brings together the most important players in the market to share experience and knowledge – from the industry for the industry,“ says Sobotta.

For the European head of Natixis Investment Managers, the key to tapping into the retail client market lies in the targeted training of advisors. This means, above all, the many retail banking advisors in savings banks and cooperative banks, who ultimately bring the Eltif to the end customer. „In order for these retail customers to receive in-depth advice, it is important that they have a comprehensive understanding of the products and the private asset markets,“ says Sobotta.