IA comment on fund suspension & use of illiquid assets in open ended funds

The Investment Association (IA), the trade body that represents UK asset managers, comments on fund suspension and the use of illiquid assets in open ended funds.

Chris Cummings, Chief Executive of the Investment Association, commenting on fund suspensions said:

“Investment funds offer a highly effective way to invest for many different customers, with different amounts to invest and different time horizons. This means ensuring that the fund is able to expand when money is flowing in, but also manage the fund effectively when money is flowing out.

“Investment managers act in the best interests of the customers whose money they invest. This means ensuring that they not only get a fair price for the client who wants to exit, but also protect the value of holdings for those who remain.

“The strict regulation of our industry allows for funds to be suspended to protect savers from losing out, whether they want to exit the fund or stay in it. While suspension is not undertaken lightly, it can be the right things to do in some circumstances. As the FCA have made clear, suspension is not an outcome they seek to avoid if it is in the best interest of fund investors.”

Chris Cummings, commenting on illiquid assets in open-ended funds, said:

“Investment managers offer their customers a great diversity of fund options which are designed to suit their investment goals.  This can mean not only investing in the shares of listed companies, but also a wide range of other assets, including bonds, property, infrastructure and the opportunity to invest in companies which have yet to offer their shares to members of the public.

“Some asset classes, particularly property and infrastructure, can provide good levels of return, but can be harder than listed company shares to buy and sell immediately.  That is why any fund that invests in them must be open and transparent about adopting this approach so its customers can decide if it is right for them.

“There are many different types of fund.  Some, such as those investing directly in property, will specialise in investing in illiquid assets.  Others will offer funds that invest a proportion of their assets in them to achieve diversification.  The approach is always set out in the fund disclosure documents so customers can chose which approach is right for them. Each approach has to conform to the regulation laid down in European and UK law, as appropriate.”

For further information, please contact:

IA press office: [email protected]

About the Investment Association (IA):

  • The IA champions UK asset management, supporting British savers, investors and businesses. Our 250 members manage £7.7 trillion of assets and the asset management industry supports 100,000 jobs across the UK.
  • Our mission is to make investment better. Better for clients, so they achieve their financial goals. Better for companies, so they get the capital they need to grow. And better for the economy, so everyone prospers.
  • Our purpose is to ensure investment managers are in the best possible position to:
    • Build people’s resilience to financial adversity
    • Help people achieve their financial aspirations
    • Enable people to maintain a decent standard of living as they grow older
    • Contribute to economic growth through the efficient allocation of capital.
  • The money our members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.
  • The UK is the second largest investment management centre in the world, after the US and manages 35% of all assets managed in Europe.