The Long Term Asset Fund structure enables investors and pension funds to diversify their portfolios and invest in a wider range of assets, according to Chris Cummings, chief executive of the Investment Association.
This in turn, he added, helps deliver long-term returns for their customers, while also providing "much-needed" additional investment for the UK economy.
Yesterday the FCA announced it had authorised its first Long Term Asset Fund (Ltaf). The types of funds are structured to hold private assets
Ltafs are open-ended investment vehicles designed to allow a broad range of investors to invest in illiquid and private assets.
They were created in a bid to solve the liquidity mismatch conundrum which has seen open-ended property funds gate for withdrawals multiple times over the past few years due to market volatility.
Steven Cameron, pensions director at Aegon said, while for some, making such investments could be daunting, they could deliver investment diversification benefits, support net zero commitments and potentially improve overall member outcomes.
He added: “The FCA will be pleased to announce the first Ltaf after putting in place the new authorisation framework back in October 2021. Ltafs are an initiative designed to increase investments in less liquid assets, initially for institutional investors, something which is very high on the Government’s agenda.
"Trustees of defined contribution pension schemes will in future need to set out their approach to investing in illiquids."
Confirming it had received approval from the FCA to launch the first Ltaf, Schroders said it would enable UK savers to take advantage of the diversification benefits that investing in private assets can bring.
