The Association of Real Estate Funds (AREF) announced that it has been working with the Investment Association (IA) on a contractual form of Onshore Professional Fund (OPF), called the Professional Investor Fund (PIF). This will sit alongside the IA’s proposed partnership and corporate vehicles and has been added in March 2020 to the IA’s UK Funds Regime Report to HM Treasury Asset Management Taskforce.
While AREF’s proposal for the PIF initially focuses on property, it could be used for wider asset classes. Like the other OPF vehicles, the PIF would be an Alternative Investment Fund (AIF), with a UK manager and depositary. The PIF would take the form of an unauthorised contractual scheme and could be closed-ended or a hybrid structure. The PIF would not be listed and would be tax transparent.
The proposal for a PIF would address the particular concern for the UK real estate funds sector. In conferring with their members and other industry organisations representing the UK funds sector, they have received positive feedback that the PIF would:
- benefit the UK funds sector generally, and should not be limited to holding real estate investments; and
- offer greater simplicity and coherence as a fund structure which can be utilised for any asset class.
The PIF would fall within the existing definition of a co‐ownership scheme as specified in the Financial Services and Markets Act 2000 (FSMA) s235A (2) – (5). AREF suggest the insertion of a definition of a PIF in FSMA s237 (3) and s237 of FSMA should be amended to take a PIF clearly outside the definition of a unit trust scheme.