AIC responds to FCA consultation paper on open-ended property funds

The Association of Investment Companies (AIC) has responded to the FCA’s Consultation Paper, ‘Liquidity mismatch in authorised open-ended property funds’.

Ian Sayers, Chief Executive of the Association of Investment Companies (AIC), said: “Today proposals are a step in the right direction. As the AIC recommended in its paper ‘Square peg in a round hole’, we are pleased to see that notice periods are a central element.

“However, the arbitrary 90/180 day period means that this will only help to reduce the problems arising from liquidity mismatches, not seek to eliminate them. The FCA acknowledges this and suggests that managers might want to set longer periods. However, in a world where daily redemption for open-ended property funds is the norm, how realistic is this? Would it not be better to set the notice period at a year (as they do in Germany, where the sector is flourishing), but allow managers to reduce it when they can certify that this is appropriate?”

The AIC’s paper ‘Square peg in a round hole’ is available here.