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City watchdog beefs up fund rules to prevent future Woodford-style collapses

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The City watchdog has launched a fresh investment fund structure to give investors safer exposure to long-term, more illiquid assets.

Long-term asset funds (LTAF) are a brand new type of investment vehicle launched by the Financial Conduct Authority (FCA).

They are intended to address liquidity mismatches between a fund’s assets and its possible redemptions, an issue that drove the collapse of Neil Woodford’s fund empire. 

LTAFs will require a minimum 90-day notice period to be accepted and redemptions cannot be more frequent than monthly, the FCA said.

Nikhil Rathi, chief executive of the FCA, said: ‘We are supporting fresh collaborative thinking designed to improve the effectiveness of UK markets while protecting standards.”

“If this innovative fund structure, created by our rules, is taken up by the asset management industry, it may provide alternative routes to returns for investors, while supporting economic growth and the transition to a low carbon economy.”