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These changes require managers to give greater thought as to the appropriate pricing mechanism for the fund and the assumptions to use for setting the price. This reflects what is already happening in the market, with managers already in some cases adapting their pricing to reflect, for example, forward funding arrangements. John has undertaken a project for a fund manager reviewing their pricing arrangements and we are happy to speak to anyone considering this.

 

As mentioned above, you can find the video of our webinar on this subject here.

 

UK open-ended funds for retail investors

 

This has continued to simmer on through the year. The FCA published another consultation paper (CP20/15) in August last year. We responded via industry bodies and submitted our own response. The FCA published a feedback paper in May 2021.

 

We are pleased that the FCA are considering a change to the deferral rules / architecture (page 11 of the paper) as this is something for which we have been lobbying since 2017.

 

More broadly, it sets out where the FCA have got to in their thinking, and confirms what had been said informally that this being slowed to allow the LTAF to come up on the express track. There is more on the LTAF below.

 

UK funds review and the LTAF

 

The UK funds review was announced in the Budget in March 2020 as part of a broader initiative to make the UK asset management industry more competitive. The first element of this, which was published in March 2020, was in respect of the tax treatment of asset holding companies (AHCs) in alternative fund structures.

 

 

 

HM Treasury published a call for input for its review of the UK funds regime in January. It sets out that “the overarching objective of the review is to identify options which will make the UK a more attractive location to set up, manage and administer funds, and which will support a wider range of more efficient investments better suited to investors’ needs”.  The proposals are divided into three areas:

 

The UK's approach to funds taxation

 

The UK's approach to funds regulation

 

Opportunities for wider reform

 

A key proposal is the introduction of a Long Term Asset Fund (LTAF). We have been heavily involved in industry responses on this, as well as submitting our own.

 

CTI & Expense Ratio Working Group

 

The Cost Transparency Initiative (CTI) was launched in November 2018 - it is an independent group supported by the Pensions and Lifetime Savings Association (PLSA), the Local Government Pension Scheme Advisory Board and the Investment Association (IA). It is a new industry standard for institutional investment cost data. John chairs the Association of Real Estate Funds (AREF) CTI & Expense Ratio Working Group and represents the real estate industry on the CTI Technical Expert Panel. We have more information about it here.

 

ESG regulation

 

John was part of the AREF working group that responded to the EU ESG SFDR RTS consultation. You can read about it here.

 

The working group is now addressing an FCA consultation on the UK equivalent.