Reed Smith Client Alerts

On 4 July 2016, Standard Life Investments suspended trading as a result of investors flooding the gates for redemptions. Several other funds, such as M&G and Aviva Investments, followed suit throughout the same week. By October 2016, most of these funds had lifted their suspensions and had resumed trading normally.

The decision to suspend redemptions by these large property funds has brought to the forefront the key question of whether real estate or other illiquid assets are appropriate for open-ended funds.

This topic was initially explored in our client alert dated 8 August 2016, “Open-ended property funds: a fund-amental mismatch?”.

Authors: Panos Katsambas Chu Ting Ng

Following fund suspensions in July 2016, the FCA released a discussion paper in February 2017 to gather stakeholders’ views on illiquid assets and open-ended investment funds and seek to provide a basis for debate by setting out several policies for FCA intervention. Depending on the scale and nature of the issues highlighted in the responses received, this may lead to new and adapted rules to be subsequently released in an FCA consultation paper for further feedback.

The issues and questions put forward for consideration by stakeholders are as follows: