Aegon AM private credit LTAF gains regulatory green light
Aegon Asset Management’s first Long Term Asset Fund (LTAF) has been granted regulatory approval, enabling it to offer a private credit strategy to UK defined contribution (DC) pension schemes.
The Financial Conduct Authority (FCA) has given the green light for the launch of the CG Aegon AM Private Credit LTAF.
It will invest in private assets that have the potential to generate higher returns compared to public markets, increase diversification, and contribute to financing companies and projects in various high-quality jurisdictions including the UK, Aegon Asset Management said.
Read more: M&G approved to launch private credit LTAF
Carne Group, Europe’s largest independent third-party management company, is acting as the authorised corporate director (ACD) of the fund.
LTAFs offer investors, like pension funds, access to illiquid assets in a regulated structure which might not have been possible in the past.
CG Aegon AM Private Credit LTAF is aimed at the UK institutional and wealth markets, and is part of the asset manager’s long-term plan to offer clients private credit strategies across a broad range of asset classes, it said.
The LTAF will invest in Aegon AM’s private credit strategies including corporate lending, fund financing, insured credit, renewables and asset backed finance, using the experience of the asset manager’s 60-strong alternative fixed income team.
Read more: Aegon adds private markets to £12bn workplace default fund
Pension funds investment in private assets, where they have not previously had much exposure, has grown in recent years.
“We are seeing increasing demand from a broad church of investors and with government and regulatory encouragement across the insurance, pension and local government markets we expect this to continue,” said
Aegon AM is seeing “increasing demand from a broad church of investors” for private assets, Jill Johnston, head of institutional business at Aegon Asset Management said.
“And with government and regulatory encouragement across the insurance, pension and local government markets we expect this to continue,” she added.
“Private markets offer exposure to a wider and more diversified pool of return drivers than is possible with liquid asset classes alone.
“This includes smaller and private businesses, privately financed infrastructure projects, and private loans to emerging economies.”
The Aegon LTAF will focus on the higher quality, lower risk segments of the market, Johnston said. The aim is for investors to have the potential to earn an ongoing illiquidity premium during the growth, de-risking and decumulation phases of their pension life cycle.
Read more: LTAFs look to diversify private markets exposure with multi-asset focus
LTAF’s valuation, subscription and redemption processes provide additional protection for investors but also encourage long-term investment where daily liquidity is not necessary, such as for long-term pension savings, she added.
Rich Willoughby, product lead at Carne Group, said: “As demand for private markets continues to intensify across both institutional and retail wealth audiences, the launch of Aegon AM’s LTAF represents an important milestone in the opening up of private credit opportunities to a broader investor base, including UK pension savers.”
