Since the introduction of the revised regulatory framework “Eltif 2.0” in January 2024, Morningstar noted in its “The State of Eltifs 2026” published in late March 2026 that the market has expanded significantly.

Eltifs gain flexibility and lose purity

Nearly 189 new products have been authorised, compared with just 92 between 2016 and 2023, reflecting how regulatory simplification has removed key barriers to adoption (see chart 1). The new rules broaden eligible investments, reduce minimum allocation thresholds (from 70% to 55%), and eliminate minimum investment requirements for retail investors, making Eltifs more accessible.

However, this increased flexibility also dilutes their pure exposure to private markets and may reduce the illiquidity premium traditionally associated with such assets.

The Eltif universe remains relatively small with around €10bn in evergreen Eltif assets by the end of 2025. Infrastructure and private credit dominate, as these asset classes align well with the long-term, income-generating profile sought by investors. At the same time, distribution remains fragmented, with 29% of evergreen Eltifs marketed in only one country, limiting broader adoption.

Liquidity in Eltifs: conditional, not guaranteed

A key innovation under Eltif 2.0 is the rise of evergreen, or semiliquid, structures, which allow periodic redemptions (see chart 2). These funds typically maintain liquidity buffers of 15%–30% and use tools such as notice periods, redemption caps, and lockups to manage withdrawals.

While these mechanisms improve accessibility, they introduce complexity and do not eliminate liquidity risk. The gating of Greenman Open Eltif in 2025 (see chart 3)—when redemptions were suspended due to insufficient liquidity—illustrates that liquidity is conditional rather than guaranteed and that such events are an inherent feature of semiliquid structures.

High fees question investor alignment

Despite strong growth, several concerns persist, according to Morningstar. Fees remain significantly higher than those of comparable public market products (see chart 4), often including layered charges and performance fees that can be triggered even under modest return scenarios.

In private credit strategies, for instance, the data provider noted that the combination of leverage and floating-rate lending can make incentive fees almost unavoidable. This raises questions about alignment between managers and investors.

Eltifs may not deliver true diversification

Moreover, Eltifs are often marketed as diversifiers, yet Morningstar added that their underlying risks frequently resemble those of traditional equity and credit markets. Private equity and private credit returns tend to correlate with public markets, particularly during periods of stress, meaning diversification benefits may be overstated. In addition, valuation practices—typically based on infrequent, model-driven assessments—can smooth volatility and obscure underlying risks.

Eltif returns, struggling to impress

Return expectations also warrant scrutiny. Target returns for private credit Eltifs are generally in the high single digits, while private equity targets range from roughly 9% to 14%. These figures are not always compelling relative to historical public market returns (annual return of 10% for global small cap over the last 15 years), especially when considering Eltifs’ higher fees, lower liquidity, and greater complexity.

Ultimately, Eltifs represent a growing but still immature segment of the investment landscape. While regulatory reform has improved accessibility and stimulated product development, the market remains heterogeneous, opaque, and operationally complex. 

Investors must therefore conduct thorough due diligence, carefully assessing fund structures, liquidity terms, valuation methodologies, and fee arrangements. The report concluded that Eltifs may play a role in expanding access to private assets, but their benefits should not be overstated, and their risks must be fully understood before allocation decisions are made.