FCA’s 180-day rule ‘spells the end’ for property funds

Paul Stocks, financial services director at Dobson and Hodge, agreed. He said having a waiting period as an expectation of a property fund — rather than a risk of suspension as it currently is — would “reduce popularity”.

He added: “Combine that with the fact you won’t know the value expected at the end, and it is highly likely to see their use reduce even more.”

Potential positives

Experts did say there were some positives to draw from the FCA's proposals, however.

Darius McDermott, managing director at FundCalibre, said the rules would be a “good result” if they stopped “hot money” from going in and out of the property asset class and investors will instead have to decide if they want to invest in property for the long term.

He added: “If investors don't want to tie their money up they always have the option of an investment trust and then just stomach the discount if the asset class is out of favour when they want or need the money. 

“There are options - investors just need to understand what they want from an investment and choose accordingly."

Meanwhile Alan Chan, director at IFS Wealth and Pensions, thought open-ended property funds would still have a role to play for the average retail investor, providing it was kept to a “small portion” for liquidity reasons.

An FCA spokesperson said: "This is an open consultation which proposes a period of between 90 and 180 days. We welcome feedback on the relative merits of these different options, and have also invited suggestions for alternative measures that might achieve the same outcome."

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