Key Takeaways
- • UK Long-Term Asset Funds (LTAFs) have grown to over 25 vehicles with £5 million in collective assets under management since Schroders launched the first LTAF in March 2023, demonstrating rapid market adoption among DC pension schemes seeking private market exposure.
- • LTAFs provide FCA-regulated access for defined contribution pension schemes to illiquid assets including private credit, real assets, and infrastructure, addressing a structural need within the £600 billion+ UK DC pension market.
- • Schroders has emerged as the market leader with multiple LTAF launches, including the Schroders Capital Global Energy Infrastructure LTAF (February 2025) and Schroders Capital Global Private Equity LTAF (September 2024), with private credit exposure concentrated in its Future Growth Capital Global and UK Private Assets sub-funds.
- • Policy initiatives including the Mansion House Compact and Accord have catalyzed institutional demand for LTAFs by actively pushing UK workplace pensions toward private market allocations, creating regulatory tailwinds for continued growth.
- • DC schemes are increasingly blending private markets into default fund arrangements through LTAFs, leveraging their average 40-year investment horizons and substantial asset base to access asset classes previously reserved for larger institutional investors.
Summary
The Long-Term Asset Fund structure has achieved significant traction in the UK institutional investment market less than three years after its inception, with more than 25 approved vehicles now operational and £5 million in collective assets under management according to Morningstar data. The LTAF was introduced by the Financial Conduct Authority in 2023 as a regulated framework enabling professional and retail investors—particularly defined contribution pension schemes—to access illiquid asset classes including private credit, private equity, real assets, and infrastructure investments.
This growth reflects substantial structural demand from the UK's £600 billion+ DC pension sector, which has historically lacked efficient mechanisms to allocate capital to private markets. Policy support has been instrumental in driving adoption. The Mansion House Compact and subsequent Accord initiatives have explicitly encouraged workplace pension schemes to increase private market exposure, creating regulatory momentum and institutional confidence in the LTAF structure. The vehicles are designed to accommodate the specific liquidity and governance requirements of DC schemes while providing long-term investors access to higher-yielding illiquid strategies.
Schroders has positioned itself as the dominant player in the LTAF market, launching multiple vehicles under its Schroders Capital Wealth Solutions and Schroders Capital umbrellas. The firm's recent activity includes the February 2025 launch of the Schroders Capital Global Energy Infrastructure LTAF, targeting energy transition infrastructure, and the September 2024 launch of the Schroders Capital Global Private Equity LTAF. The group also operates five additional sub-funds including the Future Growth Capital Global and UK Private Assets LTAFs, which carry the primary private credit exposure, alongside strategies focused on climate transition, innovation, and renewables investment.
The LTAF structure addresses a critical market gap by providing DC schemes with a regulated conduit to diversify beyond traditional public equities and bonds. With DC assets expected to double to £1 trillion and individual schemes demonstrating average investment horizons exceeding 40 years, the addressable market for long-term illiquid investments remains substantially underutilized. Survey data indicates that more than one-quarter of DC schemes anticipate significantly increasing UK private markets exposure, suggesting the LTAF market remains in early growth stages with substantial runway for further expansion among both existing and new fund launches.
This growth reflects substantial structural demand from the UK's £600 billion+ DC pension sector, which has historically lacked efficient mechanisms to allocate capital to private markets. Policy support has been instrumental in driving adoption. The Mansion House Compact and subsequent Accord initiatives have explicitly encouraged workplace pension schemes to increase private market exposure, creating regulatory momentum and institutional confidence in the LTAF structure. The vehicles are designed to accommodate the specific liquidity and governance requirements of DC schemes while providing long-term investors access to higher-yielding illiquid strategies.
Schroders has positioned itself as the dominant player in the LTAF market, launching multiple vehicles under its Schroders Capital Wealth Solutions and Schroders Capital umbrellas. The firm's recent activity includes the February 2025 launch of the Schroders Capital Global Energy Infrastructure LTAF, targeting energy transition infrastructure, and the September 2024 launch of the Schroders Capital Global Private Equity LTAF. The group also operates five additional sub-funds including the Future Growth Capital Global and UK Private Assets LTAFs, which carry the primary private credit exposure, alongside strategies focused on climate transition, innovation, and renewables investment.
The LTAF structure addresses a critical market gap by providing DC schemes with a regulated conduit to diversify beyond traditional public equities and bonds. With DC assets expected to double to £1 trillion and individual schemes demonstrating average investment horizons exceeding 40 years, the addressable market for long-term illiquid investments remains substantially underutilized. Survey data indicates that more than one-quarter of DC schemes anticipate significantly increasing UK private markets exposure, suggesting the LTAF market remains in early growth stages with substantial runway for further expansion among both existing and new fund launches.
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