Aviva PLC (LSE:AV.) has been given approval by the City watchdog for its investment management arm to launch what will be the UK’s second long-term asset fund (LTAF) to invest in illiquid assets such as property.
Aviva Investors told the media it has been given the green light to launch the new open-ended LTAF fund by the Financial Conduct Authority (FCA), following the first approval given to Schroders earlier this month.
The LTAF design aims to give broader access to illiquid and private assets such as venture capital, private equity, real estate and infrastructure.
This new style of fund was created after years of warning that open-ended funds were not suitable for investing in less liquid assets, with the International Monetary Fund warning last year that they pose a major risk to global financial stability.
In their traditional form, open-ended funds are vulnerable to waves of investor withdrawals in the wake of economic shocks such as Brexit and the Covid pandemic, when Aviva was one of several fund giants that rushed to suspend withdrawals from their property funds - and in fact is now winding up the Aviva Investors UK Property fund having never reopened it since the gating in 2020.
Aviva confirmed the regulatory approval from the FCA but said further details would be provided "in due course".
The FCA has received applications for three LTAF funds from three different groups, according to Citywire, with one more likely to be revealed soon.