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AIC responds to FCA policy statement on illiquid assets and open-ended funds

30 September 2019

The AIC has responded to the FCA’s paper ‘Illiquid assets and open-ended funds and feedback to Consultation Paper CP18/27’.

The Association of Investment Companies (AIC) has responded to the FCA’s paper ‘Illiquid assets and open-ended funds and feedback to Consultation Paper CP18/27’.

Ian Sayers, Chief Executive of the Association of Investment Companies (AIC), said: “Retail investors should be able to invest in funds where they know from the outset how they will be managed and what their redemption rights are. These should be reliable and should not change in response to foreseeable market conditions.

“Unfortunately, these proposals fail to achieve this.  Disclosure of the many possible complex measures that might be applied is both inadequate and unfair.

“Given the recent warnings from the Bank of England regarding the systemic risks such funds create, we would also have expected a more urgent approach which addressed these broader risks and not simply tinkered with existing regulation and only apply these measures to some funds.

“We hope that the further work being undertaken with the Bank of England will propose a more comprehensive and robust solution.

“In contrast to the problems endured by open-ended property funds following the Brexit vote, closed-ended property funds continued to trade. Their share prices suffered but bounced back swiftly when confidence recovered. The closed-ended structure and stock exchange listing of investment companies mean they are particularly well-suited to investing in illiquid assets. This is because managers are not forced sellers to meet redemptions, but can take a long-term view, avoiding trading suspensions and systemic risk. Meanwhile, the shares of investment companies can be traded on the stock market, offering investors liquidity throughout the day.”


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  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 363 members and the industry has total assets of approximately £197 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.
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