Sebastiaan Hooghiemstra and Marco Loria analyse fresh EU guidance on ELTIF passporting, arguing it dismantles national barriers and could unlock pan-European distribution through insurance, pension and savings wrappers.
On 5 December 2025, the European Securities and Markets Authority (“ESMA”) released a series of Q&As on European Long-Term Investment Funds (“ELTIFs”), incorporating interpretations from the European Commission (“EC”). Among these, a key response addresses national eligibility restrictions on ELTIFs arising from local laws. This guidance clarifies the full extent of the ELTIF marketing passport, potentially reshaping cross-border distribution. Given its broad implications, this article examines the EC’s insights.
Current limitations of the ELTIF marketing passport
To date, ELTIF-labeled funds have primarily been distributed through wealth management channels, including private banks, asset managers, financial advisers, and digital platforms. Recent innovations, such as Trade Republic’s nominee structure with secondary markets and quarterly redemptions, have enabled fractionalization and broader accessibility. These developments are poised for wider adoption, transforming ELTIFs into true mass-retail products.
Despite this progress, significant distribution channels, managing billions in assets under management (“AuM”) and serving millions of customers, remain fragmented. Insurance wrappers (e.g., unit-linked products), savings plans, and pension schemes like France’s Plan Épargne Retraite (“PER”) often offer tax incentives to investors. However, national laws frequently restrict ELTIFs or alternative investment funds (“AIFs”) to domestically domiciled vehicles. For instance, France requires that ELTIFs for PER and unit-linked products be established locally, with both master and feeder funds based in France. These barriers have hindered the growth of pan-EU ELTIFs.
Insurance wrappers remain pivotal in the EU retail market, broadening investor options in terms of product design and asset allocation. In France, for instance, unit-linked products represent 500 billion euro in AuM, which is nearly twice the amount managed through directly distributed funds. Excluding them from the pan-EU passport clearly disadvantages both fund promoters and investors. Notably, unit-linked ELTIFs are mostly held by insurers, not individuals, allowing insurers to leverage Solvency 2’s reduced capital charges for private equity investments. Combined with tax benefits, this has driven successful ELTIF sales in French insurance policies. Additionally, insurers provide liquidity to retail clients without immediately impacting ELTIF investments, being less liquid by nature.
Yet, restrictions impose substantial costs. Promoters were required to launch separate, country-specific ELTIFs to access markets like France’s insurance and pension sectors, with expenses borne by local customers. Investors faced delays due to time-to-market issues and pan-European sponsors could not swiftly roll out Luxembourg-based products in restricted jurisdictions, awaiting local approvals.
Historically, such national favoritism persisted because, in wrappers, the insurer or provider holds the fund units, rather than the end investor. These are bundled into distinct financial products (e.g., life insurance or pensions), with the provider acting as distributor. Thus, to date, arguments held that EU rules permitted national restrictions under insurance and pension regulations. Savings plans, however, encountered, in practice, fewer such hurdles.
The EC’s Q&A guidance on ELTIFs
The EC’s Q&A delivers crucial clarity, emphasizing that Article 1(3) of the ELTIF Regulation bars Member States from adding requirements in harmonized areas. Further, it prohibits mandating that master and feeder ELTIFs be domiciled in the same country. In the view of the EC, this position is supported by the Regulation’s definitions and Article 5(1)(e)(iv) alongside Recital 25 which envision cross-border setups without domicile requirements.
More broadly, the EC rejects national laws requiring ELTIFs to be authorized or established in a specific Member State for eligibility in (national) insurance, pension, or savings plans. No other ELTIF provisions can be nationally restricted for these products. Article 3(1) ensures pan-EU validity of ELTIF authorizations, while Articles 2(12) and 5 impose no nationality, domicile, or location requirements on the ELTIF or its AIFM. Such limits would undermine cross-border marketing and favor domestic funds.
This stance aligns with EU core principles of non-discrimination and free movement, referencing Articles 4(1) and 6(1) of the Insurance Distribution Directive (2016/97), which promote freedom of establishment and services for intermediaries.
Implications for (Luxembourg) pan-EU ELTIFs
The guidance eliminates domicile-based restrictions on master-feeder structures and wrapper products. Member States cannot condition ELTIF eligibility on the nationality, location, or domicile of the fund or its manager when marketed inter alia via insurance, pension, or savings products. Authorized ELTIFs enjoy full passporting without national barriers eroding this right.
This is particularly welcome for insurance and pension wrappers, where countries like France imposed stringent rules. It fosters a unified market, easing access for Luxembourg-based pan-EU ELTIFs. However, the EC focuses on regulatory hurdles, not tax incentives that might indirectly favour domestic products. While this gap persists, the ELTIF Q&A marks a step toward truly integrated ELTIF distribution, benefiting promoters, distributors, and investors across the EU.
Sebastiaan Hooghiemstra is a senior associate in the investment management practice group of Loyens & Loeff Luxembourg and Senior Fellow of the International Center for Financial Law & Governance at the Erasmus University Rotterdam. Marco Loria is a senior associate in the investment management practice group of Loyens & Loeff Luxembourg. The law firm is a member of Investment Officer’s panel of experts.
