“Serious questions about investor protection”

AIC responds to consultation on long-term asset funds.

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The Association of Investment Companies (AIC) has responded to the FCA’s publication today of CP 21/12: A new authorised fund regime for investing in long term assets.

Ian Sayers, Chief Executive of the Association of Investment Companies (AIC), said: “The consultation paper raises serious questions about investor protection. Recently introduced rules in the property sector require a fund to be suspended when there is material uncertainty over the valuation of its assets. As the FCA said at the time, this is an important investor protection measure, because where such uncertainty exists, it is not possible for the manager to set a fair price for investors entering or leaving the fund.

“We are concerned that these rules will not apply to the long-term asset fund (LTAF). Is this because material uncertainty over valuations could be a permanent feature of an LTAF, given the very illiquid and complex assets that it could invest in? This does not just raise the anomaly that existing funds investing in property would be subject to the material uncertainty protections, but an LTAF investing in property would not. There is a much more fundamental issue. If the assets of an LTAF are always subject to material uncertainty over valuations, then how can investors know that the price set by the manager is a fair one?”

-ENDS-

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Notes to editors

  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 360 members and the industry has total assets of approximately £239 billion.
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