Agefi Luxembourg - décembre 2025

AGEFI Luxembourg 32 Décembre 2025 Fonds d’investissement By Dr. Sebastiaan Niels HOOGHIEMSTRA, Loyens&Loeff Luxembourg * C urrently, fundpromotersmainly focus onELTIFs to obtain a retail marketing passport. However, themarketing passport ismainly effective whenusingwealthdistribution channels. Its effectiveness is for a primarily regulatory and tax reasons lim- ited for unit-linked insurance, voluntary pensionproducts and tax-incentivized invest- ment accounts (“SIA”). In fact, the last three distribution chan- nels represent billions of Euros inAuM, but have highly frag- mented requirements, leaving, de facto, fundpromoters oftenno choice other than to developELTIF products that are ori- ented towards big EUdistributionmarkets. This contribution examines these and explains why newEUdevelopmentsintermsofnon-discrimination interpretations of national voluntarypensionscheme and unit-linked insurance products laws, as well as theSIAinitiativemayleadtoamoreefficientandPan- Europeanmarket for ELTIFs. Background: TheRetailization of PrivateMarkets Over the past two decades, private markets have evolved from a specialized asset class into a well-es- tablished asset class. Professional investors have steadily expanded their allocations to private equity, venturecapital,andprivatecredit,whilepolicymakers and retail investors have become increasingly inter- ested in gaining similar access. This shift has been shapedby twomain arguments. The first argument is that the universe of investment opportunities has migrated from public to private markets.Thenumberofpubliclylistedcompanieshas fallen sharplyacrossmajor economies, asfirmsdelay orforgopubliclistingsandraisesubstantialcapitalpri- vately. This trendsuggests that an increasing shareof corporate value creation now occurs within private markets, potentially leaving public market investors with fewer opportunities todiversify their portfolios. The second argument is that privatemarkets outper- form public markets. Proponents argue that private ownership allows for longer-term decision-making, moreactivegovernance,andhighergrowthpotential, whilepublicmarketshavebecomedominatedbyma- ture firms and short-term pressures. Together, these imply that investors confined to public markets face bothdiminished access and inferior performance. Fromafinancialstabilityperspective,ashrinkingpub- licmarketmayweakendiversificationby limiting in- vestors’ ability to spread risk across sectors, geographies,andassetclasses.Yetthesenarrativesre- main contested. Critics note that private markets are less transparent, less liquid, and more difficult to value, and that their reported outperformance may reflectunaccountedrisksorreportingbiases.Expand- ing retail access therefore raises complex questions about investor protection, equity, and the evolving roleofpublicmarketsasvehiclesfortransparency,liq- uidity, andbroadparticipation in economic growth. ELTIFs versus Part 2UCIs: Marketing Passport Fund managers have traditionally focused their fundraisingeffortson large institutional investors. To attract EU institutions, managers often use Luxembourg as an investor-facing hub within their private fund structures. These Luxembourg-basedAIFstypicallyserveas access points for investors but are not themselves subject to regulatory approval or ongoing supervision in Luxembourg. Under the AIFMD, fund managers benefit fromanEU-widemarketingpassportthat allows them to market to profes- sional investors across the EU throughasinglefilingwith theLuxembourgregulator. This framework eliminates the need for separate na- tionalmarketing approvals. However, the AIFMD pass- port is limited to professional investorsanddoesnotextendto retail investors, including EU-based HNWIs. As a result, theAIFMD regime is an ineffi- cient route for managers seeking to access this in- vestor segment. In the retail domain, AIFMD grants each Member State discretion to define its own rules for marketing toretailinvestorsandHNWIs.Fundmanagerswish- ingtoraisecapitalfromtheseinvestorsmusttherefore conduct a complex, multi-jurisdictional analysis of localmarketingrequirements.Thisfragmentedregu- latory landscape makes it highly challenging to dis- tribute unregulated private funds to EU retail investors andHNWIs. For example, the Part 2 UCI, a regulated and super- visedLuxembourgfundproduct,meetslocalmarket- ing standards inmany EUand non-EU jurisdictions. However, it does not benefit from an EU-wide retail marketingpassport. SinceJanuary2024,alternativeinvestmentfundssuch as thePart 2UCI canapply for theELTIF label,which includes an EU-wide retail marketing passport. This passport allows marketing to retail investors regard- lessofticketsizeorwealth,givingfundmanagersfull discretiontodefineinvestoreligibilityandinvestment thresholdswithin the fund’s prospectus. ELTIFMarketing Passport &DistributionChannels ELTIFs are currently distributed through a wide rangeof channels.Most discussions, however, focus on direct fund investments via “wealth channels”, including private banks, asset managers, financial advisers, anddigitalwealthplatforms. Thisperspec- tive overlooks three other important distribution routes, namely (i) voluntary pension products, (ii) unit-linked insurances (“ IBIPs ”) or “insurance wrappers” and (iii) SIAs. The ELTIF marketing passport operates effectively within the wealth channel, enabling cross-border marketing across the EU. Yet, its effectiveness is far more limited for the other three channels due to varying national regulatory restrictions. With respect to SIAs, several challenges persist. Not every Member State offers such accounts; among thosethatdo,notallpermitretailAIFs,suchasELTIFs, to qualify as eligible investments. Even where inclu- sionispermitted,eligibilitycriteriadifferwidely.Vari- ations include requirements on minimum holding periods, permissible underlying investments, and local domicile rules. For instance, Italy’sPIR ( Piani In- dividuali di Risparmio ) scheme promotes long-term household investment in ItalianandEUSMEs,while theforthcomingFinanceEuropelabel,agreedin2025 byFrance,Spain,Estonia,Germany,Luxembourg,the Netherlands, andPortugal, sets similar long-termin- vestment objectives andholding requirements for re- tail investors. ELTIFsmayalsobeeligibleundervoluntarypension schemes and IBIPs in certain Member States. How- ever, similar issues arise. Many jurisdictions assert discretion over which products qualify, and some, such as France, restrict eligibility to domestically domiciledELTIFs. In summary, divergent national rules governing in- surance wrappers, voluntary pension products, and SIAshaveproducedafragmentedELTIFdistribution landscape beyond the wealth channel. While the ELTIFmarketingpassportfunctionsefficientlyfordi- rect retail distribution, inconsistent wrapper require- ments effectively create “national ELTIFs”, funds structuredtomeetspecificlocalregulations.Thisreg- ulatoryfragmentationunderminestheoriginalobjec- tive of the ELTIF framework: to establish a truly pan-European long-terminvestmentmarket. Tax Incentives&Digitalization: TheKeyRetail Catalysts TaxIncentivesapplyingtoSIAs,IBIPsandVoluntaryPen- sionProducts. Despite the differences amongMember States in the requirements applicable to regulatorywrappers, dis- tribution channels in the SIA, IBIP, and pension scheme domains represent a significant amount of AuMand customers. Each of these regulatorywrap- pers is often accompanied by tax incentives, making it, in practice, more attractive to invest in an ELTIF throughoneoracombinationofsuchwrappersrather than via traditional “wealth channels.” However, these incentivesvaryconsiderablybetweencountries and across distribution channels. In practice, Member States incentivize the use of the above-mentioneddistributionchannelsthroughmea- sures such as, but not limited to: -deductionsfromthetaxablebase,includingallowing anamountinvestedinawrappertobedeductedfrom the taxable income; - tax exemptions, including providing an exemption fromtaxonthetaxableincomegeneratedbytheassets in awrapper; - tax deferrals, including deferring the taxation of the income generated through awrapper until it iswith- drawn fromthewrapper; or -applyingauniformtaxratetotheincomegenerated by or the value of assets held in awrapper. In summary, tax incentives differ widely across dis- tributionchannels,andthenatureofthesepreferential tax treatments varies from one Member State to an- other. This diversity exacerbates the ELTIF product fragmentation problem, as ELTIF product design must be adapted to local regulatory and tax require- ments. Consequently, this may lead to undersupply of ELTIFs in smaller Member States, where the costs of adaptingproducts to local requirements oftenout- weigh the potential benefits. Digitization:OffsettingthedownsidesofDistribution/Prod- uct Fragmentation? New digital players, such as neo brokers like Trade Republic, are increasingly offering innovative digital solutionswithinthewealthmanagementandSIAdo- mains. In the wealth space, the potential is there to scale through neo brokers. For example, Trade Re- public recently started to offer semi-liquid ELTIF funds with quarterly redemptions paired a monthly secondary market on their platform. This approach leverages the collectiveAuM and high customer en- gagement typical of such platforms. Trade Republic currently serves around 10 million customers across the EU, managing approximately EUR 150 billion in AuM, and has therefore expanded its offering from traditionalbrokerageservicestoincludewealthman- agement solutions. Innovations suchas fractionaliza- tion and the development of secondary market platforms are expected to be adopted by other neo brokers in thenear future,whichcould transformthe ELTIF into a true mass-retail product within the wealth channel. Similarly, Trade Republic has begun offering SIAs in certain Member States, such as France, where PEAs ( Plan d’Épargne enActions ) alone represent over EUR 100 billion in AuM and millions of accounts. While these developments are positive and support the rapid adoption of ELTIFs as an investment product, theydonot resolve thepersistent issuesof undersup- ply in smallerMember States or the broader product fragmentation challenge across the EUmarket. ASingleMarket for Long-TermInvestment: HowEUHarmonization Is Transforming ELTIFs into a Pan-EuropeanProduct Currently, Pan-EU ELTIF-labelled funds are mainly distributedviawealthchannels,suchasprivatebanks, asset managers, financial advisers, or digital wealth platforms. However, the recent innovation of Trade Republic to use a nominee structure coupled with a secondary market and underlying products having quarterly redemptions leads to innovations like frac- tionalization and secondarymarket platformswhich are likely to be adopted by othermarket parties soon makingtheELTIFproductatruemass-retailproduct. AlthoughdigitizationisexpectedtoamplifytheELTIF marketing passport, several distribution channels with billions in AuM and millions of customers re- mainlargelyfragmented,bothintermsofdistribution andproduct offerings. Inparticular, insurancewrap- pers (e.g., unit-linked products) and voluntary pen- sion schemes (such as the PER – Plan Épargne Retraite inFrance)oftenprovidetaxincentivestoinvestorsand policyholders. However, local legislation frequently imposesrestrictionsonELTIFsandAIFsingeneral,or limitseligibilitytoELTIFsdomiciledwithinthecoun- try of the product. Additionally, tax-advantaged investment accounts, such as the PEAand PEA-PME, may accept pan-EU ELTIFs, but the criteria for obtaining tax benefits can vary significantly andmay be tied either to domestic investments or to the broader EU, creating obstacles forthedevelopmentoftrulypan-Europeanproducts. Nevertheless,recentEUdevelopmentsmayfacilitate theinclusionofELTIFsinthethreedistributionchan- nels that areoften tax-incentivized. First, aEuropean Commission Q&A is shortly expected to prohibit discrimination between local and EU ELTIF prod- ucts, ensuring that pan-EU ELTIFs can be included in national insurance and voluntary pension wrap- pers acrossMember States. Second, a recent SIAEU recommendation provides a blueprint for harmo- nized tax-advantaged investment accounts, offering Member States the option to include ELTIFs within the eligible investment bucket and to simplify tax treatment for such investments. The bottomline is that recent EUdevelopments that abolishes national favoritism, as well as grants tax- incentivestopan-EUELTIFsinconjunctionwithdig- ital distribution channels will likely enhance the ELTIF and transition froma “national product” to a more pan-EUproduct, aswell as open the doors for more mass-retail clients instead of being a HNWI product only. (*)Dr.SebastiaanHooghiemstra isaseniorassociate inthe investment managementpracticegroupofLoyens&LoeffLuxembourgandSenior Fellow of the International Center for Financial Law&Governance at the Erasmus University Rotterdam. From National to Pan-European: The Emerging Single Market for ELTIFs A s of 31October 2025, total net assets of Luxembourgunder- takings for collective invest- ment (UCIs), includingUCIs governedby the 2010 Law, specialised investment funds andSICARs, amounted to EUR6,162.3 billion. This rep- resents amonthly increase of 2.28%and a growthof 8.77% over the past twelvemonths. ThemonthlyriseofEUR137.3bil- lion was driven by positive net capitalinflowsofEUR22.1billion, combined with favourable finan- cial market developments con- tributingEUR115.2 billion. The number of UCIs stood at 3,069, slightlydown fromthe pre- vious month. Of these, 2,050 enti- ties operated under an umbrella structure, accounting for 12,350 sub-funds. Together with 1,019 traditional UCIs, a total of 13,369 fundunitswere active in the Lux- embourg financial centre. Global economic conditions in October were shapedbyrenewed tensions between the United States and China, particularly regarding rare earths essential for artificial intelli- gence technologies. However,theagreementonaone- yeartradetrucetowardstheendof themonth significantly improved investorsentiment.Inthisenviron- ment, all equity UCI categories recorded strong monthly perfor- mances,largelysupportedbycon- tinued optimism around artificial intelligence and its broad impact across the global economy. Japanese equity funds posted the strongest gains, benefiting from the formation of a new govern- ment expected to pursue expan- sionary and market-supportive policies.US equity funds alsoper- formed strongly, supported by a second consecutive 25-basis-point interest rate cut by the Federal Re- serve, resilient corporate earnings and themilestone achievement of NVIDIA becoming the first com- pany to surpass a USD 5 trillion market capitalisation. EuropeanandLatinAmericaneq- uity funds, which are less directly exposedtotheAItheme,delivered moremoderatebutstillpositivere- turns of around 2%. In terms of flows, equityUCIs recordedover- allpositivenetcapitalinvestments, with the exception of global, US andAsianequityfunds,whichex- periencednet outflows. On the fixed income side, bond markets benefited from declining yields in both theUS and Europe, while credit spreads remained broadly stable despite episodes of volatility linked to corporate fail- ures in the US. Favourable cur- rency movements, notably the appreciation of the US dollar againsttheeuro,furthersupported performance. As a result, all fixed income UCI categories delivered positive monthly returns, al- thoughcertainUSD-denominated segments recordednet outflows. Source: CSSF Global situation of undertakings for collective investment Thedevelopmentofundertakingsforcollectiveinvestmentisasfollows: NetAssets Number of UCI Number ofUCI 6000 5000 4000 3000 2000 1000 0 inbn. EUR 3500 3000 2500 2000 1500 1000 500 0 Oct.24 Nov.24 Dec.24 Janv.25 Feb.25 Mar.25 Apr.25 May.25 June25 July25 Aug.25 Sept.25 Oct.25