M&G has launched the M&G Diversified Private Credit Feeder Long-Term Asset Fund (LTAF) with £74m of initial capital, including investment from its With Profits Fund.

The fund is aimed at UK defined contribution (DC) pension schemes and other professional investors, providing access to private credit investments including lending to businesses and financing infrastructure, real estate, and other assets that are often difficult to access through listed fixed income markets.

M&G said the launch supported DC schemes seeking to diversify beyond public markets and aligned with the objectives of the Mansion House Accord.

The LTAF was launched by M&G's £83bn private markets business within its £28bn private and structured credit platform.

M&G Investments global head of client group, Neil Godfrey, said: "Our first LTAF brings to DC pension schemes a private credit capability that M&G has delivered to defined benefit pension schemes and other institutional investors for more than 25 years.

“As part of a diversified portfolio, private markets can play an important role in pension portfolios by providing returns that are less dependent on equity and bond markets, helping to improve risk-adjusted returns and resilience.”

Commenting on the launch, M&G Diversified Private Credit Feeder Long-Term Asset Fund manager, Simon Iversen, added: “As European private and structured credit grows, investors have access to an increasingly broad and diverse range of lending opportunities.

“By taking a disciplined and selective approach – backing the right businesses, with the right structures and terms – we can use our expertise in credit selection, structuring and risk management to identify the most attractive opportunities, target attractive income and build resilient portfolios that can perform across different market environments."

M&G said the fund targeted returns of 5 per cent a year above the Sterling Overnight Index Average (SONIA) over a five-year investment period, after fees and costs.

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