The Financial Conduct Authority (FCA) has published analysis of more than 11,000 alternative investment funds accessible to UK investors and concluded there is no market-wide liquidity shortage. The mismatch it did find is concentrated in one place: real estate funds.
The figures are narrow but pointed. Ten percent of property fund net asset value could be withdrawn within 30 days, while only an estimated 7 percent of the underlying assets are liquid over that same period. That gap is the mechanism behind every property fund suspension of the past decade — redemptions can be requested faster than buildings can be sold.
The review covered real estate, hedge, private equity and private credit funds. Private credit assets have more than doubled since 2021, reaching £335 billion in 2025, though the sector remains a relatively modest part of the wider alternative fund market. Those assets are concentrated among a small number of large managers, and while the share of highly leveraged private credit funds has fallen from its 2020 peak, such funds are still in the market.
Property funds have been under regulatory scrutiny since the suspensions that followed the 2016 Brexit vote and the disruption of the pandemic period. On what the FCA does with the data, chief economist Kate Collyer said: “Having this insight helps us understand how this important market is changing, where it is growing, and where risks may be building.”
References
Reuters – UK regulator flags liquidity risks at property funds
