On 25 October 2021, the Financial Conduct Authority (FCA) published Policy Statement PS 21/14, ‘A new authorised fund regime for investing in long term assets’. PS21/14 sets out a response to the feedback received to Consultation Paper CP21/12 proposing a new category of authorised open-ended fund called the long-term asset fund (LTAF).
The LTAF is designed specifically to help investment in assets including venture capital, private equity, private debt, real estate and infrastructure. Some investors are currently unable, or unwilling, to invest in long-term assets, even though these assets could meet their investment goals. With the introduction of LTAF, the FCA seek to create an environment where investment in longer-term, less liquid assets by investors who understand the risks, do not need immediate liquidity and have long term investment horizons, can flourish.
The LTAF is aimed at defined contribution 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.
This PS will primarily interest:
- asset managers with experience of managing illiquid, long-term assets;
- potential investors in long-term asset funds, like pension providers and trustees of defined contribution or hybrid pension schemes, and sophisticated or wealthy investors;
- investment advisers and private wealth managers;
- insurers who write unit-linked insurance business; and
- fund distributors
The final Handbook rules are set out in Appendix 1 of this PS and will come into force on 15 November 2021.