The Financial Conduct Authority (FCA) is considering 180-day period notice for consumers redeeming their open-ended investment funds.
The current property funds suspension across the IA Property sector is due to uncertainty in valuing their assets whilst recovering from the coronavirus pandemic.
The FCA and Bank of England have been closely watching open-ended funds for sometime looking at ways to remedy their structural mismatch.
Authorised property funds as of 30th September 2020 will be forced to suspend when there is material uncertainty over the valuation of more than 20% of their assets.
The FCA published today 3rd August 2020, the implementation of a notice period meaning fund managers could plan sales of property assets, to be able to meet redemptions as they fell due and plan when to invest or make asset sales without needing immediately to meet any unexpected requests.
The FCA said “This would mean investors would clearly know these property funds are intended for medium-term to long-term investments and the change would mean property funds could tolerate holding less cash than they currently do, enabling this money to be invested into property or other permitted assets”.
Will this be the death of property funds inside pension and investment managed funds? Having to give 180 day notice will not work for investors. Will investors move to other types of investment like real estate investment trusts?