LTAFs look to diversify private markets exposure with multi-asset focus

Multi-asset is the name of the game for long-term funds, seeking to provide solutions to defined contribution pension schemes to invest in private markets.

Several asset managers have committed to launching a Long-Term Asset Fund (LTAF), but so far, the regulator has only approved eight funds.

There is no one single strategy that stands out, but a couple of themes have emerged. Three of the funds, Schroders Capital’s Climate + and Greencoat Global Renewables LTAFs, and Aviva Investors’ Climate Transition Real Assets LTAF, have focused on the climate transition. BlackRock also said its LTAF will invest in companies that have sustainability characteristics.

Meanwhile, majority of the funds, BlackRock Diversified Strategies, Legal & General Private Markets, WS Fulcrum Diversified Private Markets, Schroders Capital Climate + and Aviva Investors Climate Transition Real Assets, have all opted to launch multi-asset strategies, with the first three including private credit investments. Aviva Investors’ other LTAF is focused on real estate and Arcmont Asset Management has opted for a pure private credit fund.

Previously, Citywire reported that Aegon Asset Management is preparing to launch a private credit LTAF, and WTW announced that it will roll out a private equity-focused LTAF, with initial commitments of £450m.

Read more: New long-term funds set to democratise private credit

A quick scan of LTAF launch announcements suggests that the focus on multi-asset funds is how asset managers are hoping to provide diversification to investors. The combination of different asset classes can also work as a liquidity mechanism. By investing part of the assets into more liquid investments, the fund manager can meet any redemptions the fund permits. It’s important to note that these cannot be more than monthly and need t come with a notice period of no less than 90 days.

It is unclear how much interest the LTAFs have actually attracted, since the first one, launched by Schroders, only came to market in March 2023, and none of the funds have disclosed their size.

WTW is the only group to have publicised the amount of initial commitments, and set a target size of at least £2bn, according to IPE.

Read more: Private debt sector poised for influx of pension money