FCA approves launch of first LTAF

The Financial Conduct Authority (FCA) has given regulatory approval for Schroders to launch the UK’s first Long-term Asset Fund (LTAF).

LTAFs are open-ended investment vehicles designed to help investment in assets such as venture capital, private equity, real estate and infrastructure.

The government has been pushing for defined contribution (DC) pension schemes to consider greater investment in long-term private assets, with the FCA finalising rules for LTAFs in late 2021.

Following the approval of the FCA, Schroders’ private assets division, Schroders Capital, will focus on providing DC schemes and other investors with access to its private asset investment capabilities.

Schroders added that LTAFs may also have a role to play in the UK wealth market going forward, although this is subject to the outcome of the FCA’s consultation on broadening access to long-term funds.

Commenting on the approval, Schroders group chief executive, Peter Harrison, said the firm felt that a wider range of UK savers should be able to take advantage of the returns and diversification benefits that investing in private assets can bring.

“There are some great industries and firms which could be further supported by long-term capital,” he continued.

“The LTAF structure is designed to address this and I am delighted that the imminent launch of Schroders' first LTAF, which is the first to be approved in the UK, will enable these companies to start benefiting from big pools of long-term capital and, in turn, help long-term savers.”

Schroders Capital head of private asset solutions, David Seex, described LTAFs as an exciting regulatory initiative that will allow pension savers to invest in private assets.

“Of course, it is important for investors and their advisors to be clear as to the long-term nature of private investments and when and how they will be able to access their funds,” he added.

“Key considerations should be the liquidity profile of their investment and how this fits with their investment horizon.”

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