Legal & General has launched a new private markets fund for its 5.2 million DC members.
The fund will also be available for other DC schemes to invest in, both directly and via the newly launched L&G Lifetime Advantage Fund default strategies.
The new private assets fund is is structured as a fund of funds, with an investment in a new private markets Long Term Asset Fund (LTAF) — the Legal & General Private Markets LTAF —sitting alongside exposure to liquid securities, as well as L&G and third party funds.
This L&G Private Markets Access Fund will utilise L&G’s £48bn private markets platform, and will invest in a range of assets, including private equity, real estate, private credit and infrastructure. This will include investments in clean energy, affordable homes, university spin-outs and critical infrastructure. Utilising this platform give the fund the ability to invest across L&G’s own private markets capabilities, as well as those available through individual securities and third-party strategies.
By accessing assets through this fund, L&G says it aims to deliver long-term growth and offer greater diversification than is available through an investment strategy this is based solely on public markets. It adds that this private market investments can also drive greater engagement with scheme members.
L&G’s fund offers DC investors a single point of access to a diversified portfolio of private market assets. Underlying strategies such as the L&G NTR Clean Power (Europe) Fund and the L&G Build to Rent Fund will be available for inclusion in the fund, with all asset allocation decisions made by L&G’s multi-asset team, subject to their fiduciary duty that aims to invest in the best interests of clients.
L&G says it has been working to bring the Private Markets Access Fund to market since 2022, with the intention of delivering greater DC member access to the potential benefits that private markets can provide.
The fund’s development contributed to L&G’s decision to become a founder signatory of the Mansion House Compact, an initiative launched in July 2023 to enable greater DC access to unlisted UK companies. L&G’s strategy will include allocations to unlisted equities as part of a diversified private markets multi-asset portfolio, with the ability to allocate up to 40 per cent into UK assets.
The fund has already received considerable interest from clients, including the London Stock Exchange Group, EDF Energy and L&G’s own DC pension scheme, which L&G says is indicative of the untapped demand and appetite for private market exposure by DC funds.
The announcement builds on L&G’s recent strategic update in which the group announced that it would bring together its public and private markets capabilities in a single asset management division and target growth in its workplace defined contribution pensions business.
Legal & General group chief executive officer António Simões says: “Today’s launch is an important step forward in putting UK pension capital to work to drive economic growth, while supporting people to build the savings they need for retirement.
Building on our refreshed strategy set out in June, this fund will offer DC scheme savers access to high growth investment opportunities, provide innovative funding for communities, society and the real economy, and power L&G’s Private Markets growth ambitions.”
Simões says this structure enables the fund to deliver liquidity for daily dealing in normal dealing conditions. DC schemes will be able to invest in the Fund directly or via the L&G Lifetime Advantage Funds, L&G’s new range of Target Date Funds.
L&G has also launched its new Lifetime Advantage Fund range seeks to improve members’ retirement outcomes through a 100 per cent allocation to growth assets, including a meaningful allocation to private markets via the L&G Private Markets Fund, in the earlier years of their savings journey.
The fund range is designed to evolve as members’ needs change in the run-up to retirement, with members staying in one fund throughout their retirement journey during which the Fund’s asset allocation will evolve.
L&G head of DC Rita Butler-Jones adds: “Our members are at the core of what we do, and we believe providing millions of savers with exposure to the potential returns available through global private markets will support the delivery of better long-term retirement outcomes. When developing the Fund we have spent a lot of time talking to clients about what is important to them, ensuring that the assets align to our members’ long-term investment horizons, while delivering value for money.
“L&G is the largest pension provider in the UK with over 5.2 million DC members and we believe the launch of this fund will be a game changer for DC pension savers. The fund is a one-stop-shop for private market exposure and we hope it will inspire DC members into greater engagement with their pension, by investing in tangible assets which can benefit the real economy.”