Interactive Investor

Long Term Assets Fund (LTAF) finally gets off the ground

9th March 2023 12:28

by Jemma Jackson from interactive investor

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interactive investor comments on the FCA authorising the first LTAF.

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Today’s news that the FCA has authorised the first LTAF comes exactly a month after Treasury Select Committee hearing saw committee member Mr John Baron pose this question:"Can we not equalise or level the playing field between investment trusts and unit trusts? Investment trusts have a much greater track record in investing in infrastructure, renewable energy, social housing and many other good causes that the government want investment put into, and yet we have not created that level playing field.”

interactive investor, the UK's second-largest platform for private investors, has long been frustrated by an apparent regulatory fixation on the open-ended structure when it comes to boosting the UK economy via illiquid assets, and has also called for stamp duty on investment trust purchases to be scrapped, to create a more level playing field with open-ended funds.

Commenting on today’s news from the FCA, Dzmitry Lipski, Head of Funds Research, interactive investor, says: “It’s been slow off the starting line, and only time will tell if we see a belated stampede. We suspect it will be more watch and wait. 

“But while we have had reservations about Long Term Assets Funds from a retail investor perspective, you have to respect the huge resource and effort that goes into making these things happen. We remain of the firm view that for illiquid assets at least, investment trusts have the most appropriate structure. But we also accept that investment trusts can have issues of their own, as we have seen with widening discounts in the alternative assets trust space.

“LTAFs should, in theory, shield investors where there is a ‘run’ on the fund, when large numbers of investors head for the emergency exit at the same time. But this is an untested model and we still struggle to see how the structure will solve the liquidity issue. So while we watch and wait, we still wish the structure the very best as it gets off the starting line, because it is investors who are the ones at risk of injury.”

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