The implementation of the Investment Association’s (IA) proposal for a new Long-Term Asset Fund (LTAF) is looking increasingly likely following the Chancellor’s speech on Financial Services delivered to Parliament today, 9 November 2020. In his speech, Chancellor Rishi Sunak made the following statement (emphasis added):
"To encourage UK pension funds to direct more of their half a trillion pounds of capital towards our economic recovery I’m committing to the UK’s first Long-Term Asset Fund being up and running within a year".
This is great news for firms looking to offer certain types of retail and DC pension investors access to long-term investments with the additional protection offered by a UK authorised fund structure.
The LTAF aims to address the so-called "liquidity mismatch" between daily dealing authorised funds and underlying illiquid assets, giving greater flexibility to managers to offer redemption opportunities which match the liquidity profile of the fund’s underlying assets.
We look forward to continuing our work with the IA to shape the LTAF proposition and eagerly await a consultation paper from the Financial Conduct Authority in due course.