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FCA proposed new fund structure for patient capital welcomed

16 December 2018

The Association of Investment Companies has welcomed the possibility of a new fund structure offering retail investors access to ‘patient capital’ assets, but warns that consumers entering or leaving the fund should receive a fair price.

The FCA’s recent discussion paper Patient Capital and Authorised Funds explored the idea of creating a new authorised fund structure that would offer exposure to assets such as infrastructure, real estate, private equity/debt and venture capital.

Ian Sayers, chief executive of the AIC, said it was “good” the FCA was thinking about ways to invest more in patient capital, given that close-ended investment companies already offer professionally managed access to assets such as infrastructure, property and private companies and their shares are readily tradeable on the stock market. However, he added that investors would need to be clear on how the fund works.

He commented: “Ensuring that consumers have the right to sell their investments at a time of their choosing has been a cornerstone of UK funds regulation for decades. If new, open-ended fund structures holding illiquid assets are to be created for retail investors, consumers must be warned if these protections are to be reduced.”

He added: “Given the inherent uncertainty over the value of illiquid assets, and the practical experience that the disposal of illiquid investments is often at a very different price to the latest valuation, great care will be required to ensure that investors entering or leaving the fund pay or receive a fair price.”

The FCA’s discussion paper Patient Capital and Authorised Funds has a closing date for submissions of 28 February 2019.

 

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