Latest News

UK regulator sets out rules for long-term fund with minimum 90-day notice period

Economy2 hours ago (Oct 25, 2021 11:11)

© Reuters. FILE PHOTO: The full moon is seen rising behind skyscrapers at Canary Wharf and the London skyline, London, Britain, September 14, 2019. Picture taken on September 14, 2019. REUTERS/Toby Melville/File Photo

By Huw Jones

LONDON (Reuters) -Britain’s financial watchdog set out new rules for funds that invest over the longer term to help tackle climate change and economic recovery from COVID-19, ruling out redemptions to investors more frequently than monthly.

The new Long-Term Asset Fund (LTAF) regime creates a category of authorised open-ended fund for investing in long-term, illiquid assets such as venture capital, private equity, private debt, real estate and infrastructure.

“We want investment in long-term, illiquid assets, including productive finance, to be a viable option for investors… who are seeking the potential for higher long-term returns in return for less or no immediate liquidity,” the Financial Conduct Authority said in a statement.

In a consultation paper last year, the FCA proposed a notice period for redemptions of between 90 and 180 days.

“So we have set a minimum notice period of 90 days and a requirement that LTAF cannot offer redemptions more frequently than monthly,” the FCA said on Monday.

Funds that invested in illiquid property and offered daily redemptions had to be suspended last year when markets suffered extreme volatility as economies entered lockdowns to fight the pandemic.

It prompted regulators to seek a type of fund for which the frequency of redemptions better matches the time needed to sell assets to avoid lengthy suspension or destabilising firesales.

The FCA said there are no caps on fees an LTAF can charge, and there are no specific sustainability disclosures on investments in such funds.

They are aimed at sophisticated investors and pension funds, but the FCA said it will consult next year on whether certain retail investors should also have access.

“If this innovative fund structure, created by our rules, is taken up by the asset management industry, it may provide alternative routes to returns for investors, while supporting economic growth and the transition to a low carbon economy,” FCA CEO Nikhil Rathi said.

Last month a government-backed report proposed that a cap on how much pension fund can invest in less liquid assets should be scrapped to encourage longer term investing.

Britain sets out long-term fund rules to aid climate action, COVID recovery

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Seven High Frequency Indicators for the Economy

Previous article

Britain to raise minimum wage to 9.50 pounds a hour

Next article

You may also like


Leave a reply

Your email address will not be published.

More in Latest News