Long-term asset funds (LTAFs) are now eligible for inclusion in Stocks & Shares Isas, marking a significant step in efforts to open up private markets to retail investors.
The rule change, which took effect on 6 April, allows investors to hold LTAFs in both Stocks & Shares Isas and Junior Isas, as part of wider reforms aimed at boosting UK investment and supporting economic growth.
Data from Morningstar shows the LTAF market has already grown to around £7.3bn in assets under management, up from £5bn in June 2025, with a further £3.1bn in committed but uncalled capital.
However, adoption remains largely institutional, with defined contribution pension schemes accounting for the majority of assets.
There are currently around 25 LTAF strategies available in the UK, focused mainly on private multi-asset and private debt, with smaller allocations to private equity, infrastructure, venture capital and property.
Morningstar said Isa eligibility could act as a catalyst for growth in the wealth and retail channels, although platform readiness and operational complexity remain key barriers.
Evangelia Gkeka, principal in manager research at Morningstar, said: “Allowing LTAFs into Stocks & Shares Isas is an important signal of the direction of travel.
“It has the potential to broaden access to private assets, but it doesn’t remove the need for careful due diligence. These are complex, semi-liquid products, and education will be critical if the retail channel is to scale responsibly.”
Separate research from the Investment Association suggests demand could follow. Nearly three in five UK investors said they would consider investing in an LTAF following the Isa rule change.
LTAFs invest in illiquid assets such as infrastructure, commercial property and private equity, offering access to opportunities traditionally reserved for institutional investors.
The move forms part of a broader government push to position the UK as a leading destination for financial services, with chancellor Rachel Reeves previously outlining plans to expand access to private markets through Isa reform.
Alongside the changes, LTAFs will no longer be eligible for the Innovative Finance Isa, although existing holdings will be transitioned into Stocks & Shares Isas.
While the direction of travel is clear, industry experts warn that scaling LTAFs in the retail market will depend on adviser education, platform capability and ensuring investors understand the risks and liquidity constraints associated with private assets.