Asset Managers Propose New Fund Structure For Illiquid Assets

UK asset managers have proposed a new fund structure aimed at local authority pension funds and defined contribution (DC) schemes to support investors looking to access illiquid assets.

The Investment Association (IA), the industry trade body, presented the basic plans for such a structure last month but today set it out in greater detail as part of a report on a wider package of measures that have been submitted to the Treasury.

The Long-Term Asset Fund (LTAF), as the new vehicle has been dubbed, would be a modified version of the Non-UCITS Retail Scheme (NURS) structure, with three key features:

• The ability to invest widely in private markets, funding companies and wider projects, including public infrastructure and housing;
• Allow redemptions to be structured to reflect the time it takes to sell these investments, with flexibility from daily to up to two years; and
• Build on the high standards of customer protection already present in NURS.

Chris Cummings, chief executive of the IA, said: “We have heard from DC schemes whose members will benefit from the long-term diversification provided by illiquid assets. They would like access to investment vehicles that allow for regular investment with valuations that reflect the underlying assets. They are investing over many decades and do not need to focus on daily redemptions.