There are several types of funds that invest in private capital. RCF, HF or ELTIF are the main ones, and they differ in terms of minimum investment amount, degree of liquidity or aspects such as limitations and available investment options.
In this post we explain them all, their differences and for which type of investor they are designed.
An RCF is a risk capital or private capital fund. This category has various types of funds, such as Private Equity or Venture Capital.
The RCF usually involves long-term investments, mainly comprising periods between 3 and 10 years; therefore they are illiquid funds.
The minimum investment in these funds for a retailer is €10,000, provided that this investment does not represent more than 10% of their assets and they have received advisory services (if their assets do not exceed the value of €500,000).
However, funds usually establish much higher minimum entry amounts, which are sometimes prohibitive. This has changed with Crescenta.
On the other hand, there are Hedge Funds (HF), which are marketed to professional customers who invest at least €100,000. Their main characteristic is that they have fewer investment restrictions.
According to the CNMV (National Securities Market Commission), they can invest in any type of asset, follow the investment strategy they consider most appropriate and invest to a greater extent than the rest of the funds (up to several times their net worth). They are also illiquid products, and they can be repaid only every three or six months.
In addition to the RCP and HF, there are ELTIF. This type of fund was created to facilitate long-term investment in the real economy.
It is the only type of fund for long-term investments that can be distributed across borders between both professional and retail investors. However, only a few funds have been launched due to limitations in the distribution process and rules on the composition of portfolios.
With the aim of resolving this issue, work is being carried out at the European level on the so-called ELTIF 2.0, which will eliminate the minimum investment restrictions, among other aspects. This is great news for retail investors, as they will be the main beneficiaries thereof, but it is also great news for Crescenta, which is very well positioned to be an early adopter and thus strengthen its mission to democratise investment.
The name of a fund hides a lot of information that can be useful. Although it may seem like a random string of letters and numbers, they can give us many clues as to who manages them, what their investment strategy is or what type of vehicle it is.
Let's see an example:
The name of the fund's management company (KKR) usually appears first. The following term gives us information about where and what the fund invests in (North America) and the number specifies the fund's number (XII).
In addition, we can find acronyms such as FI, UCITS, ETF, which specify the type of vehicle, or others that indicate the currency (EUR or USD).
Author
Crescenta
The RCF, HF and ELTIF differ in terms of minimum investment amount, degree of liquidity or aspects such as limitations and available investment options
When you click on any underlined term, you can see a definition and example of each concept
When you click on any underlined term, you can see a definition and example of each concept
When you click on any underlined term, you can see a definition and example of each concept
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