CP21/12: A new authorised fund regime for investing in long term assets

Open consultation
07/05/2021
07/05/2021
Consultation closes
25/06/2021

In this Consultation Paper (CP) we are consulting on a regime to enable UK-authorised open-ended funds to invest more efficiently in long-term, illiquid assets.

Read CP21/12 (PDF)

Why we are consulting

We want investments in long-term, illiquid assets (including productive finance) to be a viable option for appropriate investors with long-term investment horizons who understand the risks.

Investment in productive finance assets has the potential to yield good long-term outcomes for investors. It is also is important for economic growth and the creation of jobs. Without it, some long-term projects with good potential returns may not happen. 

But some investors feel there are barriers to this type of investment, related to fund structures as well as to wider issues. We have been working with the Bank of England, the Treasury and industry, through the Productive Finance Working Group to break down some of those barriers. We hope that the creation of the Long-Term Asset Fund (LTAF) will overcome issues related to fund structures and help facilitate an environment where investors that wish to invest in productive finance assets can do so.

We propose a flexible regime that aims to offer an appropriate level of investor protection and to address the specific risks of investing in long-term illiquid assets via an open-ended fund. Initially, we propose to restrict distribution of the LTAF to professional investors and sophisticated retail investors. It is important that this regime commands the confidence of potential investors, so we are seeking your views on whether our proposals do this.

We also want your comments on whether, and how, we could safely permit future wider retail access to these funds than our proposed rules would permit.

Who this applies to

This consultation will primarily interest:

  • asset managers with experience of managing illiquid, long-term assets
  • depositaries
  • potential investors in long-term asset funds, like pension providers and trustees of defined contribution or hybrid pension schemes, and sophisticated or wealthy investors
  • investment advisers and private wealth managers
  • insurers who write unit-linked insurance business
  • fund distributors     

Next steps

Online response form

We are seeking feedback on this CP by 25 June 2021.

You can use the response form email us at [email protected] or write to us at: Michael Collins and Tom Bramhill, Financial Conduct Authority, 12 Endeavour Square, London E20 1JN.