The UK government has laid the secondary legislation for a new private assets onshore fund structure, the Reserved Investor Fund (RIF), with several fund managers expected to launch RIFs from 19 March 2025.

The RIF is designed to enable a wide range of investors, including pension schemes, to invest simply and cheaply in illiquid assets, such as UK real estate.

The structure is designed to bring three main advantages, including tax efficiencies, flexibility, with quarterly redemptions, and cost savings, offering a competitive total expense ratio compared with existing structures.

Several fund managers are expected to take advantage and convert existing funds into RIFs, or launch new RIFs outright, after the secondary legislation confirmed that the new structure will officially launch from 19 March 2025.

Association of Real Estate Funds (AREF) CEO, Paul Richards, highlighted the news of the secondary legislation as a "big moment" for the UK funds industry, stating: “Fund managers and their underlying clients tell us they want more options to invest in UK property – from hotels to housing – and they’d like to do it without having to go offshore.

"The RIF gives them that option, and we’re not surprised to see many of our fund manager members planning RIFs in future or eyeing the opportunity closely."

AREF member and Apex Group head of real assets advisory, Melville Rodrigues, agreed, arguing that RIFs will be a "conduit to attract capital and facilitate growth – the number one mission of the UK government".

"This new fund can act as a valuable new economic catalyst by creating jobs, accelerating the development of our nation’s infrastructure, facilitating the regeneration of our town centres and furthering sustainability strategies," he continued.

"I am very grateful for the officials’ constructive engagement with, and widespread industry support for, the RIF proposal. It is exciting to see several fund managers, large and small, warming up for RIF launches.”

AREF chair and abrdn global head of real estate, Anne Breen, suggested that the launch of RIFs will also unlock "meaningful" investment that is needed in the UK, "making it easier for organisations like defined contribution pensions to direct their savers’ money into deserving and financially viable opportunities, bringing benefits to all parties".

Fiera Real Estate chief operating officer, Emma Cullen, suggested that the development could also be of particular interest to the Local Government Pension Scheme (LGPS) funds.

"As the UK fund landscape evolves, investor focused developments of this nature which will provide cost effective and tax efficient structuring (particularly for secondary trades) which will be of interest to institutional investors and particularly LGPS," she explained.

This article was first published on our sister website, Pensions Age.

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