Skip to main content

“The elephant in the room”

8 October 2018

AIC responds to FCA consultation on illiquid assets held in open-ended funds.

The Association of Investment Companies (AIC) has responded to the consultation paper on illiquid assets and open-ended funds published today. The paper follows the problems suffered by many open-ended property funds after the EU referendum, when funds were forced to suspend trading altogether.

Ian Sayers, Chief Executive of the Association of Investment Companies, said: “Open-ended funds investing in property suffer from a fundamental liquidity mismatch. While it’s right that the FCA looks at a range of measures to protect consumers, the consultation paper ignores the elephant in the room, which is that the open-ended structure is never going to be ideal for an illiquid asset such as property.

“In contrast to the problems endured by open-ended property funds following the Brexit vote, closed-ended property funds continued trading, and no manager was forced to sell assets because investors sold shares. While discounts initially widened, they have now returned to previous levels.

The greater suitability of the closed-ended structure for property investment is also highlighted by substantial outperformance and higher yields. In the ten years to July 2017, closed-ended funds in Morningstar’s Property Direct – UK sector returned 79.7% on an NAV basis and 203.4% on a share price basis, with open-ended funds in the same sector returning just 52.9%.

The question should not be how to fix open-ended property funds, but rather why the open-ended option is so commonly chosen when a better alternative exists.”


Source: AIC/Morningstar (NAV total returns to 31/07/18)


Follow us on Twitter @AICPRESS


  1. The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment.  Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs. The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help members add value for shareholders over the longer term. The AIC has 351 members and the industry has total assets of approximately £188 billion.
  2. Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance.  The value of investment company shares, and the income from them, can fall as well as rise.  You may not get back the full amount invested and, in some cases, nothing at all.
  3. To stop receiving AIC press releases, please contact the communications team.


View the latest investment company announcements or search the 12 month archive.

View announcements

Saving for children

Discover saving for children with investment companies.

Find out more

Case study questionnaire

Would you be willing to be a case study in the press?

Complete our questionnaire

Media enquiries

Annabel Brodie-Smith
Communications Director
Tel: 020 7282 5580

Elmley de la Cour
Communications Manager
Tel: 020 7282 5583

William Sanderson
Communications Executive
Tel: 020 7282 5584