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FCA finalises rules for new fund to invest in long-term assets

Sophisticated investors and pension funds are among those who will have access to new types of investment opportunities following changes made by the firm

The FCA has confirmed that it will be taking forward proposals to create a new type of open-ended authorised investment fund which will help support investment in assets like infrastructure and private equity. 

It revealed investment in these assets has the potential to generate better returns for investors, including those saving for retirement in defined contribution pension schemes and can support the economic recovery from Covid-19.

Currently, some investors are unable, or unwilling, to invest in long-term assets, even though these assets could meet their investment goals.

According to the firm, the new rules create a Long-Term Asset Fund (LTAF) regime, a new FCA regulated fund that is designed specifically to help investment in assets including venture capital, private equity, private debt, real estate and infrastructure. 

The FCA said it has put in place rules to ensure there is a “consistency” between how long it will take to sell assets and how often and quickly an investor will be able to sell out of the fund.

Nikhil Rathi, chief executive of the FCA, said: “We are supporting fresh collaborative thinking designed to improve the effectiveness of UK markets while protecting standards. 

“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.”

The FCA will be consulting next year on the potential for widening the distribution of the LTAF to certain retail investors. 

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