Investor ticket size

Minimum investment tickets are a key factor. RAIFs with an ELTIF label require a non-waivable minimum investment of EUR 100,000. Conversely, Part 2 UCIs with an ELTIF label may accept smaller tickets - often as low as EUR 10,000 - significantly expanding the eligible investor base.

Reporting and compliance

Part 2 UCIs are authorized and directly supervised by Luxembourg’s financial regulator (CSSF) in addition to being subject manager-level supervision under the Alternative Investment Fund Managers Directive (AIFMD). RAIFs, by contrast, are only supervised at the manager-level under the AIFMD. Part 2 UCIs face more extensive reporting and compliance obligations beyond the AIFMD. For example, Part 2 UCIs must meet stricter prospectus requirements.

Investor/distributors recognition

A key commercial distinction is that Part 2 UCIs with an ELTIF label often enjoy greater confidence among both distributors and investors - within the EU and in key non-EU markets - compared to RAIFs with the same label. This is largely due to the additional regulatory obligations imposed by the Part 2 UCI regime.

Time-to-market

RAIFs with an ELTIF label typically launch more quickly than Part 2 UCIs, as they only require CSSF approval for the ELTIF label at the fund level. By contrast, Part 2 UCIs are subject to a dual approval process with the CSSF, simultaneously covering both the Part 2 UCI regime and the ELTIF label.

Given the similarities to familiar US retail products, broader distribution potential, and greater recognition among investors and distributors, many USFMs prefer ELTIFs structured under the Part 2 UCI regime over those using the RAIF regime. However, to balance time-to-market with investor accessibility, a common approach is to first launch the ELTIF under the RAIF regime and later seek CSSF approval to convert it into the Part 2 UCI. This conversion enhances regulatory access to non-EU HNWIs and broadens commercial reach by lowering the minimum investment to EUR 10,000.

It is important to note that Part 2 UCIs without the ELTIF label also provide strong access to EU HNWIs. However, where the investment strategy permits, distributors increasingly favor ELTIF-labelled Part 2 UCIs, not only because they come with an EU marketing passport, but also due to a growing familiarity with the ELTIF brand among both investors and distributors.

Our next Snippet deals with the most common legal forms used for ELTIF-labelled RAIFs and Part 2 UCIs.

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