Fidelity International is the latest workplace pension provider to commit to investing in private assets, and will target a 15 per cent allocation in its default strategy within three years.
This allocation will be managed through Fidelity’s first Long Term Asset Fund (LTAF) which received regulatory approval from the FCA in August.
Fidelity’s default strategy, FutureWise will become the first investor into this LTAF, which will invest in a range of private asset classes, including private equity, private credit, infrastructure, real estate and natural resources.
The integration process will begin in 2025, with FutureWise increasing exposure gradually to the LTAF over three years, targeting an allocation of 15 per cent during the growth phase.
Fidelity’s experienced investment team will select specialist general partners (GPs) across these different asset classes. The LTAF It will also provide exposure to public assets for liquidity purposes.
Fidelity has over 700,000 members in its DC schemes.
Fidelity International, head of workplace investing, Dan Smith adds: “We are committed to offering pension scheme members the best possible outcomes. This continued focus on generating strong investment outcomes for members is supported by increasing diversification, combining opportunities across public and private markets.
“Incorporating Fidelity’s LTAF within FutureWise’s strategy will create new investment opportunities, broadening the range of assets that members are exposed to. We believe this will help to improve risk-adjusted returns and long-term outcomes for our members, within a robust and sustainable governance framework.
“FutureWise’s development from a lifestyle to a target date fund structure in recent years has resulted in considerable growth for the strategy and helped to enhance member outcomes. The integration of private assets as part of its strategy marks the latest stage of its evolution.”
Fidelity International global head of platform solutions, Stuart Warner adds: “Incorporating private assets into our default strategy is a significant milestone for members as they save for retirement.
“The pensions adequacy gap is very real and will create significant retirement issues for individuals over the coming decades if we do not address and enhance overall member outcomes. For DC members whose investment horizon is measured in decades not years, we believe there is strong alignment in the benefits of private market investments and member objectives.
“Fidelity International is highly supportive of emerging efforts to unlock so-called ‘productive capital’ from defined contribution schemes. We welcome the government’s current review of the pensions and retirement landscape, with increased focus on values and outcomes. Our LTAF supports the government’s focus, putting long-term pension money back into the real economy.”
