Fidelity International has received regulatory approval from the Financial Conduct Authority (FCA) to launch its first long-term asset fund (LTAF) to provide investors with access to a globally diversified range of public and private asset classes.
LTAFs are a new type of UK-regulated, open-ended investment vehicle aimed at making it easier for defined contribution (DC) schemes to invest in long-term illiquid assets such as private equity, venture capital and infrastructure. Schroders was first to announce regulatory approval for an LTAF, in March 2023, while HSBC and WTW announced launches in March and April this year, respectively.
In June Arcmont and Carne Global announced having received approval from the UK’s Financial Conduct Authority (FCA) for a joint private debt LTAF.
Fidelity’s LTAF will aim to provide globally diversified exposure across private equity, private credit, infrastructure, real estate and natural resources, as well as exposure to public assets for liquidity purposes.
“Today, a number of clients are already asking to include private assets in their solutions, and we only expect this to grow over the coming years,” said Henk-Jan Rikkerink, global head of solutions and multi asset at Fidelity International.
“In a world of challenged returns and reduced diversification from more traditional asset classes, clients are looking for a wider range of options to meet their long-term investment objectives.”
He added: “Our LTAF will aim to provide DC pension schemes with diversified exposure to private assets in a single, convenient vehicle. We believe that investing in private assets broadens the investment opportunity set and will improve the risk-adjusted returns and diversification characteristics of a portfolio over the long term.”
LTAFs are now one of the ways that DC schemes can access access private markets, but they are traded quarterly and not all DC platforms can accommodate this. at present, including through Long-Term Asset Funds (LTAFs), co-investment, and daily dealt funds with a component of private markets
LTAFs are held up as the solution to get more DC money into unlisted (like RE and infra), but most of the DC platforms are still set up for daily dealing and the LTAF does not solve this.
According to a survey from Defined Contribution Investment Forum (DCIF), if there were no constraints available, the majority of respondents would prefer to access illiquids via an LTAF, with co-investment being a favourite route only for 16% of respondents.
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