It will take a brave set of trustees to be the first movers into the Financial Conduct Authority-regulated (FCA) Long-term Asset Fund (LTAF), Partners Group global head of consultant relations, Joanna Asfour, has advised.

In October 2021, the FCA finalised the rules for its LTAF framework in an effort to encourage greater investment in long-term illiquid assets, generate better returns for pension savers and address the “market failure” of DC pension schemes not investing in long-term illiquid assets, despite having the investment horizon to do so.

Speaking at the PLSA Investment Conference in Edinburgh, Asfour stated: “It will take a brave set of trustees to dip into the LTAF world and make it happen. I think the investment management community is ready, consultants are advising on private markets, and investment platforms are ready to accommodate but it will take those [trustee] first movers.”

Also speaking at the event, Barnett Waddingham partner, Sonia Kataora, said: “It is harder to get DC members that inflation plus return that they need. You can’t solely rely on public equities, which most DC schemes have survived on.

“What private markets allows you to do is widen that opportunity set. You know that there are more private market companies coming to market than public companies. You know that private companies are staying private for longer, and it is typically in those early stages where there is the most value to be had.

"If you are staying in publicly-listed equities you are missing out potentially on that value. We know that the banks are pulling back from lending, as they have perhaps done so since the global financial crisis, so there is a widening opportunity set for private lending.”

Also on the panel, Phoenix Corporate Investment Services head of CIS, Jess Williams, explained that the conversations she is having about including private assets on investment platforms are about operational and practicality concerns.

For this, “there will be additional administration that will be required, additional operational governance, and I think as we stop to work our way through this, it will be quite manual to begin with, with a higher degree of manual intervention”, she said.

“But none of these things are insurmountable.”

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