FCA is consulting on reducing the potential for investor harm from the liquidity mismatch in open-ended property funds. Investor harm is caused by the fact that investors can redeem frequently, often daily, yet the underlying property in which funds invest cannot be bought and sold that frequently. As a result, managers may need to suspend dealings where too many investors want to simultaneously redeem their investments. It proposes to require investors to give notice before redeeming their investment – maybe of up to 180 days – but welcomes comments on alternative methods.
Consultation closes on 3 November.