DC pensions experts anticipate a sharp rise in Long Term Asset Funds (LTAFs) in the coming years, with multiple managers currently developing them, according to research from the DC Investment Forum (DCIF).
According to one platform, 20-30 investment managers are creating LTAFs, while another states that numerous LTAFs seek FCA permission. Imran Razvi of the Investment Association believes that more LTAFs, including asset-specific products, will emerge.
Pension schemes are monitoring developments, with all Mobius Life clients interested and those managing more than £1bn either establishing or using private market alternatives. A March 2024 DCIF study notes diverse approaches to private markets, which provide issues for asset managers since some prefer LTAFs while others prefer co-investment.
The study also examines differing perspectives on performance fees, cost management, and the role of private markets in the DC glidepath.
DCIF chair Mark Austin says: “We are truly seeing innovation at play, driven by demand from pension schemes wanting to access private markets in different ways. The research highlights the fact that education remains an important area of focus for pension schemes to understand and overcome the value of private market investments and the financial benefits they can contribute towards members’ retirement outcomes.”