Investment trusts have criticised Hargreaves Lansdown for describing its launch of Long-Term Asset Funds (LTAFs) as giving retail investors access to private markets for the first time.
The platform has partnered with Schroders Capital to offer two LTAFs within a SIPP, but the Association of Investment Companies (AIC), the trade body representing investment trusts, said the claim is misleading, pointing out that investment trusts “have been giving retail investors access to private markets for decades.”
The AIC highlighted that investment trusts “have been tried and tested through challenging market conditions” and allow investors to buy and sell easily on the stock market. In contrast, LTAFs limit redemptions, with “minimum notice periods of 90 days and restrictions on how much can be redeemed.”
It added that while “different structures have their strengths and weaknesses,” to ignore investment trusts as a way of accessing private markets is “plainly wrong.” Investment trust shares can be bought on nearly all investment platforms and held in ISAs, SIPPs, and general investment accounts.
Hargreaves Lansdown has clarified its messaging, emphasising that LTAFs expand the platform’s existing range of investment options rather than providing first-time access to private markets. The platform already offers a variety of private market opportunities, including the UK’s first digitised VCT service and LTAFs are intended to complement existing private market investment trusts, giving clients additional ways to diversify their portfolios.
Association of Investment Companies (AIC) chief executive Richard Stone says: “The launch of the Long-Term Asset Fund to retail investors has been heralded as a milestone, giving these investors access to private markets for the first time. But this is wrong – investment trusts have been giving retail investors access to private markets for decades.
“The investment trust structure has been tried and tested through challenging market conditions, and allows investors to buy and sell easily by trading shares on the stock market. In contrast, LTAFs limit redemptions, with minimum notice periods of 90 days and restrictions on how much can be redeemed.
“Clearly, different structures have their strengths and weaknesses, but to ignore investment trusts as a way of accessing private markets is plainly wrong. We have seen before how investing in hard-to-sell assets within structures which promise investors redemption without a realistic timeframe can lead to those promises being unmet.
“Investment trusts offer the opportunity to invest in a wide range of assets and should be considered by any investor looking to include private assets within their portfolio. Investment trust shares can be bought on nearly all investment platforms and can be held in ISAs, SIPPs and general investment accounts.”
Hargreaves Lansdown head of platform investments Emma Wall says: “We are pleased and proud of the breadth of investment options on Hargreaves Lansdown’s platform and see LTAFs as a welcome addition to this choice. Last year we launched the UK’s first digitised VCT service, offering retail investors an opportunity to invest in unlisted and early-stage businesses through a trust structure. Our investment analysis team produces research on oeics, investment trusts, ETFs and equities and regularly selects investment trust ideas for our clients. We see LTAFs as complimentary to private market investment trusts, offering diversity to our clients.”
