GB - New rules for open-ended funds investing in illiquid assets
On 30 September 2019 , the Financial Conduct Authority (FCA) has confirmed new rules which apply to certain types of open-ended fund investing in inherently illiquid assets such as property.
The new rules apply to these funds, known as non-UCITS retail schemes (NURSs), but will not apply to other types of fund, such as UCITS, which are already subject to restrictions relating to such assets.
The FCA’s new rules require that investors are provided with clear and prominent information on liquidity risks, and the circumstances in which access to their funds may be restricted. They place additional obligations on the managers of funds investing in inherently illiquid assets to maintain plans to manage liquidity risk. The rules also aim to reduce the potential for some investors to gain at the expense of others and reduce the likelihood of runs on funds leading to ‘fire sale’ of assets which disadvantage fund investors. The new rules announced today come into effect on 30 September 2020.