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Financial conduct authority
The UK’s Financial Conduct Authority grants ‘sophisticated investors’ and pension funds access to asset classes such as private equity and infrastructure under new rules. With illiquid assets often generating higher returns than listed stocks and more conventional government bonds, the UK watchdog is expanding access while maintaining some safeguards.
The regulator said yesterday that it was proposing to create a new type of open-ended investment fund. A Long Term Asset Fund (LTAF) scheme is being put in place, designed specifically to channel money into assets such as venture capital, private equity, private debt, real estate. and infrastructure.
“We are supporting new collaborative thinking designed to improve the efficiency of UK markets while protecting standards. If this innovative fund structure, created by our rules, is taken up by the asset management industry, it can offer alternative avenues of return to investors, while supporting economic growth and the transition to a low-income economy. carbon emission, ”Nikhil Rathi, CEO of FCA, said.
One theme in recent years has been improving access to areas such as private equity, hedge funds, forms of ownership and infrastructure. These assets, increasingly important with more and more companies remaining private or taking longer to list on the stock market, are often beyond the reach of individual or even wealthy investors.
The LTAF is aimed at defined contribution pension plans that might be interested in investing, depending on their investment horizons and risk appetite. It also offers long-term investment opportunities for sophisticated investors and some high net worth individuals.
The FCA said it would explore the idea of expanding LTAF distribution to some retail investors next year.
“While this would potentially open a controlled path for retail investors to higher risk assets than some of the other pathways currently available, such as unauthorized funds, safeguards would also be needed to ensure retail investors understand the risks involved. Next year’s consultation will come up with proposals on how to achieve this, ”FCA said.