UK FCA Proposes to Open Investment Opportunities in Longer-Term Assets

Market opportunities could be opened for investors including Defined Contribution (DC) pension schemes to invest in a range of longer-term liquid assets, under a series of proposals released by the UK Financial Conduct Authority. The opportunities to invest in less liquid assets in the UK is mainly through closed-ended funds and investment trusts, but there is potential to create new products, including open-ended, FCA-authorised vehicles. There is also the potential to facilitate greater investment in longer-term productive assets, such as research and development, technology. The UK DC market particularly is comprised of multiple long-horizon of small schemes but could be provided with significant new opportunities for investment. A series of recommendations to facilitate investment in such assets are included in a report The final report, ‘A Roadmap for Increasing Productive Finance Investment’ released by the FCA’s Productive Finance Working Group. The reforms can contribute to portfolio diversification, stability, boost retirement returns and support the innovative economy. Its release follows a discussion paper from earlier this year.