In a recent interview with Margareta McConnell, the head of the DACH region at Moonfare, the conversation delved into the evolving landscape of retail investing, with a focus on the new European Long-Term Investment Fund (ELTIF) product. McConnell highlighted the growing trend towards democratization of private equity investments, driven by factors such as investor demand for diverse opportunities, progressive regulations, and advancements in digital technologies. However, McConnell noted that barriers still exist, including high minimum investments, liquidity constraints, and limited access to top-tier funds, hindering individual participation in private markets.
The introduction of the ELTIF 2.0 legislation by the European Union was identified as a significant regulatory catalyst in advancing the democratization process. This updated framework offers more flexibility, expands eligible assets, introduces liquidity options, and allows for fund-of-funds structures, potentially funneling up to EUR 100 billion into new investments over the next five years. Moonfare is at the forefront of leveraging ELTIF 2.0, combining fund investments and co-investments to provide access to a diversified portfolio of companies with a single investment.
In response to shifting investor sentiments, McConnell highlighted the trend towards portfolio diversification, with a growing number of investors prioritizing private market allocations as a way to mitigate market volatility. With a gradual stabilization of inflation and interest rates, investors are recalibrating their strategies to include private market investments. The role of private markets was further emphasized by the example of companies choosing to stay private longer, indicating a paradigm shift in investor perceptions towards private versus public markets.
McConnell also discussed the transformative potential of technology in enhancing the investment experience, while underscoring the value of human touch in fostering relationships and community within the investment sphere. Moonfare’s collaboration with leading art galleries serves as an example of leveraging partnerships to innovate within the industry. Insights from a comprehensive survey of individual investors revealed a preference for buyouts and secondaries, reflecting a strategic response to macroeconomic uncertainties and a broader trend towards diversification in private market investing.
In the realm of impact investing, McConnell highlighted the operational complexities introduced by regulatory frameworks like Article 9 funds, calling for a harmonized global regulatory landscape to ensure transparency and effectiveness in sustainable investment practices. As the future of retail investing continues to evolve towards inclusivity, diversification, and strategic integration of technology, McConnell’s insights offer a glimpse into the opportunities and challenges facing individual investors in this new investment frontier.
