EEA plans to reopen its £600m life settlements fund "as soon as possible", once the outcome of an FSA consultation on the sale of traded life policy investments (TPLIs) has been agreed.
The consultation, which closed on 23 January and is expected to be published in mid-March, follows the regulator's labelling of TPLIs as "Ponzi schemes" and "death bonds" in a statement in December.
Peter Winders, EEA marketing director, told IFAonline the suspended fund would be in a position to reopen, should the FSA clarify its use of "emotive" language to describe the sector.
"[The fund] does have liquidity and the directors are confident we could open up soon," he said. EEA was still receiving investment requests, he added.
Fund performance had appeared strong prior to suspension, with $90m inflows and $19m redemptions during November. But after the FSA's statement, the majority of investors cancelled their subscriptions, with around 15% requesting redemption within two days.
"We said we could handle a flood... we couldn't handle a tsunami", he said. Though EEA conducts 65% of business in the UK, "the FSA's comments went round the world", with foreign investors being some of the most panicked.
"It's perfectly acceptable to have a conversation on whether [TLPIs] are suitable for the mass retail market," Winders said, but he added he felt the language used was surprising.
The regulator has released similar guidance before, he added: "but this is the first time it has used it for an entire asset class."
Winders praised the "hundreds" of IFAs with clients invested in the fund, with most being "hugely supportive". And he defended the autonomy of the adviser when recommending products: "Everyone is trying to do down the IFA... they should be free to advise their client accordingly."
Advisers with clients in the fund told IFAonline in December the FSA's "reckless" language had led to panic redemptions.
EEA last week reported above-average maturities of £40m for December and January, which Winders said showed an ability to generate the necessary cash reserves to re-open the fund. It currently holds around 10% in cash, with a target of around 25%.
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