Two years ago the London Stock Exchange (LSE) launched the Specialist Fund Market (SFM), its first new market since Aim back in 1995. The SFM was set up and touted as the first public capital market specifically designed for specialist investment vehicles, in the belief that there was a gap in the market for a trading platform that properly accommodated the needs of the investment fund industry.
Unfortunately, this coincided with a severe recession that saw capital markets grind to a virtual halt. Like all other markets, the SFM has suffered, with only five funds being admitted to trading by September 30 2009. The question is whether its failure to attract more is down to market conditions, strong competition from other markets or a fundamental flaw in its structure.
Although there was little activity on the SFM in its first two years, there has been a flurry of admissions...