City watchdog strikes to guard savers who invest in funds holding hard-to-sell assets
The Financial Conduct Authority is establishing a brand new ‘illiquid assets class’
The City watchdog has introduced measures designed to guard savers who invest in funds holding difficult-to-sell assets like property.
But the foundations will present no safety for traders in funds like Neil Woodford’s suspended Equity Income, which froze savers’ cash inside in June.
The Financial Conduct Authority is establishing a brand new ‘illiquid assets class’.
Funds in this class should droop buying and selling when the impartial agency that screens their efficiency believes there’s ‘materials uncertainty’ concerning the worth of greater than 20 per cent of their assets.
They will then have to supply clearer warnings to traders that their cash may very well be trapped.
Several property funds needed to lock traders in following the Brexit referendum, as worries over property costs induced traders to tug their cash out, and managers couldn’t promote their holdings quick sufficient.
Ryan Hughes, of funding platform AJ Bell, stated the foundations imply ‘we’re more likely to see funds droop dealing extra continuously’.
Woodford had invested an excessive amount of of traders’ cash in difficult-to-sell unlisted corporations, and was pressured to droop the fund whereas he tried to promote a few of his holdings.