diff --git a/modules/@angular/common/test/directives/ng_for_spec.ts b/modules/@angular/common/test/directives/ng_for_spec.ts
index b5c209b8c9..5930ae10cf 100644
--- a/modules/@angular/common/test/directives/ng_for_spec.ts
+++ b/modules/@angular/common/test/directives/ng_for_spec.ts
@@ -264,7 +264,7 @@ export function main() {
        }));
 
     it('should use a default template if a custom one is null', async(() => {
-         const testTemplate = `<ul><template ngFor let-item [ngForOf]="items" 
+         const testTemplate = `<ul><template ngFor let-item [ngForOf]="items"
             [ngForTemplate]="contentTpl" let-i="index">{{i}}: {{item}};</template></ul>`;
          TestBed.overrideComponent(TestComponent, {set: {template: testTemplate}});
          const cutTemplate =
diff --git a/modules/@angular/compiler/src/view_compiler/compile_element.ts b/modules/@angular/compiler/src/view_compiler/compile_element.ts
index 936e029d0f..b0085dfc88 100644
--- a/modules/@angular/compiler/src/view_compiler/compile_element.ts
+++ b/modules/@angular/compiler/src/view_compiler/compile_element.ts
@@ -73,7 +73,7 @@ export class CompileElement extends CompileNode {
     this.instances.set(resolveIdentifierToken(Identifiers.Injector).reference, this.injector);
     this.instances.set(
         resolveIdentifierToken(Identifiers.Renderer).reference, o.THIS_EXPR.prop('renderer'));
-    if (this.hasViewContainer || this.hasEmbeddedView) {
+    if (this.hasViewContainer) {
       this._createAppElement();
     }
     if (this.component) {
@@ -97,9 +97,7 @@ export class CompileElement extends CompileNode {
     this.view.createMethod.addStmt(statement);
     this.appElement = o.THIS_EXPR.prop(fieldName);
     this.instances.set(resolveIdentifierToken(Identifiers.AppElement).reference, this.appElement);
-    if (this.hasViewContainer) {
-      this.view.viewContainerAppElements.push(this.appElement);
-    }
+    this.view.appElements.push(this.appElement);
   }
 
   private _createComponentFactoryResolver() {
@@ -144,7 +142,7 @@ export class CompileElement extends CompileNode {
     if (isPresent(embeddedView)) {
       var createTemplateRefExpr =
           o.importExpr(resolveIdentifier(Identifiers.TemplateRef_)).instantiate([
-            this.appElement, this.embeddedView.viewFactory
+            o.THIS_EXPR, o.literal(this.nodeIndex), this.renderNode
           ]);
       var provider = new CompileProviderMetadata({
         token: resolveIdentifierToken(Identifiers.TemplateRef),
diff --git a/modules/@angular/compiler/src/view_compiler/compile_view.ts b/modules/@angular/compiler/src/view_compiler/compile_view.ts
index 863197ab42..9dcd3ae30f 100644
--- a/modules/@angular/compiler/src/view_compiler/compile_view.ts
+++ b/modules/@angular/compiler/src/view_compiler/compile_view.ts
@@ -46,7 +46,7 @@ export class CompileView implements NameResolver {
   public rootNodes: CompileViewRootNode[] = [];
   public lastRenderNode: o.Expression = o.NULL_EXPR;
 
-  public viewContainerAppElements: o.Expression[] = [];
+  public appElements: o.Expression[] = [];
 
   public createMethod: CompileMethod;
   public animationBindingsMethod: CompileMethod;
diff --git a/modules/@angular/compiler/src/view_compiler/view_builder.ts b/modules/@angular/compiler/src/view_compiler/view_builder.ts
index 2ea9f76281..14d3181b75 100644
--- a/modules/@angular/compiler/src/view_compiler/view_builder.ts
+++ b/modules/@angular/compiler/src/view_compiler/view_builder.ts
@@ -477,7 +477,8 @@ function createViewClass(
     new o.ClassMethod('dirtyParentQueriesInternal', [], view.dirtyParentQueriesMethod.finish()),
     new o.ClassMethod('destroyInternal', [], generateDestroyMethod(view)),
     new o.ClassMethod('detachInternal', [], view.detachMethod.finish()),
-    generateVisitRootNodesMethod(view), generateVisitProjectableNodesMethod(view)
+    generateVisitRootNodesMethod(view), generateVisitProjectableNodesMethod(view),
+    generateCreateEmbeddedViewsMethod(view)
   ].filter((method) => method.body.length > 0);
   var superClass = view.genConfig.genDebugInfo ? Identifiers.DebugAppView : Identifiers.AppView;
 
@@ -493,7 +494,7 @@ function createViewClass(
 
 function generateDestroyMethod(view: CompileView): o.Statement[] {
   const stmts: o.Statement[] = [];
-  view.viewContainerAppElements.forEach(
+  view.appElements.forEach(
       (appElement) => { stmts.push(appElement.callMethod('destroyNestedViews', []).toStmt()); });
   view.viewChildren.forEach(
       (viewChild) => { stmts.push(viewChild.callMethod('destroy', []).toStmt()); });
@@ -599,7 +600,7 @@ function generateDetectChangesMethod(view: CompileView): o.Statement[] {
   }
   stmts.push(...view.animationBindingsMethod.finish());
   stmts.push(...view.detectChangesInInputsMethod.finish());
-  view.viewContainerAppElements.forEach((appElement) => {
+  view.appElements.forEach((appElement) => {
     stmts.push(
         appElement.callMethod('detectChangesInNestedViews', [DetectChangesVars.throwOnChange])
             .toStmt());
@@ -717,3 +718,26 @@ function generateVisitNodesStmts(
   });
   return stmts;
 }
+
+function generateCreateEmbeddedViewsMethod(view: CompileView) {
+  const nodeIndexVar = o.variable('nodeIndex');
+  const stmts: o.Statement[] = [];
+  view.nodes.forEach((node) => {
+    if (node instanceof CompileElement) {
+      if (node.embeddedView) {
+        const parentNodeIndex = node.isRootElement() ? null : node.parent.nodeIndex;
+        stmts.push(new o.IfStmt(
+            nodeIndexVar.equals(o.literal(node.nodeIndex)),
+            [new o.ReturnStatement(node.embeddedView.viewFactory.callFn([
+              ViewProperties.viewUtils,
+              o.THIS_EXPR.callMethod('injector', [o.literal(parentNodeIndex)]), o.THIS_EXPR,
+              o.literal(node.nodeIndex), node.renderNode
+            ]))]));
+      }
+    }
+  });
+  stmts.push(new o.ReturnStatement(o.NULL_EXPR));
+  return new o.ClassMethod(
+      'createEmbeddedViewInternal', [new o.FnParam(nodeIndexVar.name, o.NUMBER_TYPE)], stmts,
+      o.importType(resolveIdentifier(Identifiers.AppView), [o.DYNAMIC_TYPE]));
+}
diff --git a/modules/@angular/core/src/linker/element.ts b/modules/@angular/core/src/linker/element.ts
index 08ea8a022d..ce1f6bb181 100644
--- a/modules/@angular/core/src/linker/element.ts
+++ b/modules/@angular/core/src/linker/element.ts
@@ -17,9 +17,8 @@ import {ViewType} from './view_type';
 
 
 /**
- * An AppElement is created for elements that have a ViewContainerRef,
- * a nested component or a <template> element to keep data around
- * that is needed for later instantiations.
+ * An AppElement is created for elements that have a ViewContainerRef
+ * to keep track of the nested views.
  */
 export class AppElement {
   public nestedViews: AppView<any>[];
diff --git a/modules/@angular/core/src/linker/template_ref.ts b/modules/@angular/core/src/linker/template_ref.ts
index 4964105e61..9004d88687 100644
--- a/modules/@angular/core/src/linker/template_ref.ts
+++ b/modules/@angular/core/src/linker/template_ref.ts
@@ -43,15 +43,16 @@ export abstract class TemplateRef<C> {
 }
 
 export class TemplateRef_<C> extends TemplateRef<C> {
-  constructor(private _appElement: AppElement, private _viewFactory: Function) { super(); }
+  constructor(
+      private _parentView: AppView<any>, private _nodeIndex: number, private _nativeElement: any) {
+    super();
+  }
 
   createEmbeddedView(context: C): EmbeddedViewRef<C> {
-    var view: AppView<C> = this._viewFactory(
-        this._appElement.parentView.viewUtils, this._appElement.parentInjector,
-        this._appElement.parentView, this._appElement.index, this._appElement.nativeElement);
+    const view = this._parentView.createEmbeddedViewInternal(this._nodeIndex);
     view.create(context || <any>{});
     return view.ref;
   }
 
-  get elementRef(): ElementRef { return this._appElement.elementRef; }
+  get elementRef(): ElementRef { return new ElementRef(this._nativeElement); }
 }
diff --git a/modules/@angular/core/src/linker/view.ts b/modules/@angular/core/src/linker/view.ts
index 2f52fdc63f..a6419a44e8 100644
--- a/modules/@angular/core/src/linker/view.ts
+++ b/modules/@angular/core/src/linker/view.ts
@@ -88,6 +88,11 @@ export abstract class AppView<T> {
    */
   createInternal(rootSelectorOrNode: string|any): ComponentRef<any> { return null; }
 
+  /**
+   * Overwritten by implementations.
+   */
+  createEmbeddedViewInternal(templateNodeIndex: number): AppView<any> { return null; }
+
   init(lastRootNode: any, allNodes: any[], disposables: Function[]) {
     this.lastRootNode = lastRootNode;
     this.allNodes = allNodes;
diff --git a/modules/benchmarks/src/tree/ng2_static_ftl/tree_root.ngfactory.ts b/modules/benchmarks/src/tree/ng2_static_ftl/tree_root.ngfactory.ts
index f2a78bac2e..b90b89a996 100644
--- a/modules/benchmarks/src/tree/ng2_static_ftl/tree_root.ngfactory.ts
+++ b/modules/benchmarks/src/tree/ng2_static_ftl/tree_root.ngfactory.ts
@@ -92,13 +92,20 @@ class _View_TreeRootComponent0 extends import1.AppView<import3.TreeRootComponent
     const parentRenderNode: any = this.renderer.createViewRoot(this.parentElement);
     this._anchor_0 = this.renderer.createTemplateAnchor(parentRenderNode, (null as any));
     this._appEl_0 = new import2.AppElement(0, (null as any), this, this._anchor_0);
-    this._TemplateRef_0_5 =
-        new import11.TemplateRef_(this._appEl_0, viewFactory_TreeRootComponent1);
+    this._TemplateRef_0_5 = new import11.TemplateRef_(this, 0, this._anchor_0);
     this._NgIf_0_6 = new import10.NgIf(this._appEl_0.vcRef, this._TemplateRef_0_5);
     this._expr_0 = import7.UNINITIALIZED;
     this.init([], [this._anchor_0], []);
     return (null as any);
   }
+
+  createEmbeddedViewInternal(nodeIndex: number): import1.AppView<any> {
+    if (nodeIndex === 0) {
+      return viewFactory_TreeRootComponent1(
+          this.viewUtils, this.parentInjector, this, 0, this._anchor_0);
+    }
+  }
+
   injectorGetInternal(token: any, requestNodeIndex: number, notFoundResult: any): any {
     if (((token === import11.TemplateRef) && (0 === requestNodeIndex))) {
       return this._TemplateRef_0_5;