FCA announces rules for open-ended investment fund

The Financial Conduct Authority (FCA) has finalised the rules for a new type of fund designed to invest efficiently in long-term assets.

The UK watchdog will be taking forward proposals for the open-ended investment fund, designed to help support investment in assets like infrastructure and private equity.

The FCA explained that currently some investors are unable or unwilling to invest in long-term assets.

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 LTAF is aimed at DC pension schemes which may be interested in investing, in line with their investment horizons and risk appetite. It also offers long-term investment opportunities to sophisticated investors and some high-net-worth individuals.

The authority said that sophisticated investors and pension fund are among those who will have access to the new types of investment opportunities.

The FCA said that it is consulting next year on the potential for widening the distribution of the LTAF to certain retail investors.

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

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