The proposals were contained in the trade body’s “2025 Vision” paper, which outlined three key areas of development to meet the changing needs of investors.
This included plans for a new fund structure, which will enable managers to invest in a wider range of less liquid assets, such as infrastructure and venture capital. The IA says this had the potential to “unlock new long-term investment opportunities for savers and providing companies and infrastructure projects with much-needed funding”.
Other key areas of development include a renewed focus on sustainability and stewardship, particularly in the context of global climate change. The IA says: “More consistent definitions, labelling and disclosure will help customers navigate this new landscape with confidence.”
The IA also wants the asset management industry to look at a greater adoption of technology to drive innovation, improve operational efficiency, lower costs to customers and protect against increasingly complex and borderless cyber threats.
Aegon’s pension director Steven Cameron welcomed these proposals and said they would impact on the workplace pensions market.
Cameron says: “Within the pensions world, many savers in the accumulation phase have very long savings horizons, and might benefit from sacrificing daily liquidity for the opportunity to increase their exposure to illiquid assets, albeit within a diversified portfolio.
“There are different considerations for those taking an income from their pension, where sufficient liquidity is clearly more important.”
He adds: “As the IA says, such funds are less likely to be appropriate in the mainstream retail fund market, and are best suited for individuals who have taken advice.
“This does raise challenges around how to incorporate them into workplace defined contribution schemes, particularly in an auto-enrolment environment. Here, most individuals invest in default funds without making a conscious investment decision.
“Further consideration will be needed to think through whether and which illiquid assets have a place in default funds, with careful governance. There’s also a question over whether members would be comfortable with a move away from daily pricing or restrictions on their current ability to switch funds or transfer to a new scheme at any time.”
The Investment Association’s chief executive Chris Cummings adds:“The IA’s proposals to help develop a new Long Term Asset Fund will respond to changing customer needs and support the financing of companies and public projects.
“With the UK set to leave the EU over the next few months, these proposals will also help future proof the UK’s investment landscape, ensuring it can remain competitive on a global scale and allowing international investors to benefits from innovation in our country’s fund regime.”
