In its response to the Commission’s UCITS VI consultation, LMA has said that liquidity should not be the sole factor taken into consideration when deciding asset classes eligibility for UCITS funds. The list of eligible assets should be expanded to include certain types of loans, because, amongst other reasons:

  • loans present an attractive investment and risk profile, in terms of average returns, income generation, volatility and default rates;
  • senior secured loans have a long history of institutional investment and a well-established and active secondary market; and
  • a liquidity facility could be used to bridge the receipt of sales proceeds.

(Source: LMA Requests Inclusion of Loans Within UCITS Framework)