ELTIF fees explained: entry, ongoing, exit and performance

ELTIFs and comparable funds can charge several kinds of fees: an entry fee when you buy, ongoing charges every year, sometimes an exit fee, sometimes a performance fee, and in addition transaction costs and costs at property level. Which ones apply to a particular fund is stated in its key information document (KID), statute and prospectus. Because fees are charged on a balance that would otherwise keep growing, small yearly differences compound into a large gap over a long holding period. This article explains each type, shows where to find it, and walks through a hypothetical calculation so you can see the effect for yourself.

What fees do ELTIF funds charge?

There is no single fee schedule for ELTIFs. The ELTIF Regulation, as amended by Regulation (EU) 2023/606, sets rules on authorisation, portfolio, borrowing, redemptions and disclosure, but each fund sets its own charges. The common categories are these.

Some of these are charged to you directly. Others are charged inside the fund, so they reduce its value without appearing as a separate bill. That is why the total cost of owning a fund is larger than the line labelled "management fee".

What is the difference between entry fee and ongoing charges?

An entry fee is a one-off deduction at the start. If you invest a given amount and the entry fee is a percentage of it, only the rest goes to work in the fund. You start below your invested amount, and the remaining balance then has to earn back that shortfall.

Ongoing charges are recurring. They are taken every year, typically from the fund's assets, and so lower the value of your units steadily. Over a long life they usually matter more in total than the entry fee, simply because they repeat each year and compound.

The practical point: compare both, and compare them over the same holding period. A fund with no entry fee and higher ongoing charges can cost more over many years than a fund with an entry fee and lower ongoing charges, or the reverse. Only a calculation over your intended horizon tells you which. The fee impact calculator does this arithmetic.

What is a performance fee?

A performance fee rewards the manager when the fund does better than a defined level. The statute should say how it is calculated: what the reference level or hurdle is, whether past losses must be recovered first, over what period it is measured, and whether it is paid on realised or unrealised gains.

For real assets this last point is important. Because property values are estimated by valuers and not set by a market, a performance fee based partly on valuations is paid on an estimate. Read the wording on how and when it is paid out. Ask whether any part is returned to investors if values later fall. See valuation and NAV for why the estimate matters.

Where do I find fund costs in the KID and the statute?

Three documents together give the full picture.

• The KID. Under the PRIIPs Regulation (EU) No 1286/2014, the KID has a costs section showing, in a standard layout, the total effect of costs on the investment over time, and separate lines for one-off and ongoing costs, including transaction costs and any performance-related charges. It is the natural starting point for comparing products on a like-for-like basis. See how to read a KID and the KID glossary entry.
• The statute and prospectus. They define each fee in legal terms: the percentage, the base it is applied to, the timing and the conditions. They are more detailed than the KID and are where performance-fee mechanics and exit fees are spelled out.
• The annual report. It shows what the fund actually paid in the last period, including costs incurred in the property portfolio and on financing.

If the figures in these documents do not match, ask the seller to explain the difference in writing before you invest. Also ask the seller whether they receive any commission or fee from the manager, since that affects how you read their advice.

How do fees reduce returns over time?

Fees reduce the balance in two ways. A one-off fee cuts the amount that starts working. A yearly fee reduces the growth rate, and the lost growth compounds, because next year's growth would also have applied to what was taken.

A hypothetical illustration (not a forecast, not a real fund)

The example below is purely hypothetical. It is not a prediction, not a return you should expect and not data about any real fund. Its only purpose is to show how the arithmetic of fees works.

Assumptions: you invest EUR 10,000 for 10 years. The assets earn a gross return of 5 % per year. Ongoing charges are 1.5 % per year. There is an entry fee of 3 %. The exit fee is 0 %.

The formula is:

V = S × (1 − v) × (1 + r − p)^n × (1 − w)

where S is the amount invested, v is the entry fee, r is the gross annual return, p is the annual ongoing charge, n is the number of years and w is the exit fee. This simple form treats the ongoing charge as a subtraction from the yearly return and ignores taxes, performance fees and the timing of cash flows.

The difference is EUR 2,606. The assets in both cases earn the same 5 % gross, yet the investor who pays these costs ends with a clearly smaller sum. In this example the yearly charge, repeated for 10 years and compounded, does more damage than the one-time entry fee. You can change every assumption in the fee impact calculator and compare two fee structures side by side.

Limits of the example: real funds differ in how fees are charged, performance fees can add further cost, returns are not constant and may be negative, and costs also exist at property and financing level. It illustrates a method, not an outcome.

Do property-level and transaction costs matter too?

Yes. A real-estate fund pays for maintenance, insurance, property managers, local taxes and periods when space is empty. It pays transaction costs when it buys or sells buildings, and interest on its loans. These costs reduce income and value before the fund-level fees are even applied, so a high property-level cost base can weigh on results even when the visible management fee looks modest. The real-estate fund guide has a layer-by-layer table. When comparing two funds, check how each one reports these costs and whether the KID's cost figures include them.

How can I compare the fees of two funds?

1. Put the KID cost figures side by side, using the same holding period for both.
2. Note which costs are one-off and which recur.
3. Read the statute for performance fee terms and exit fee conditions.
4. Check borrowing, because interest is a major cost for leveraged funds.
5. Include the fees of the seller or platform, if any, as they may come on top of the fund's own costs.
6. Run both structures through the calculator with realistic and cautious return assumptions, not only optimistic ones.
7. Weigh cost against what you receive: liquidity, diversification, the manager's record and the risks described in the risks guide.

Cost is only one criterion, and the cheapest option is not automatically the right one. A more expensive fund might hold assets that are hard to reach otherwise. What matters is that you know the full cost before you commit and that you can justify it.

Frequently asked questions

General information. Not investment advice or a suitability assessment.

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