Momentum is building behind the long-term asset fund structure after a number of asset managers have launched strategies this year.
The asset manager announced today (27 November) that it had created the Aviva Investors Multi-Sector Private Debt LTAF. The fund has received an initial £750m of capital from the asset manager’s My Future Focus default pension strategy.
The fund is also open to investment from outside parties. Its creation follows the launch of a real assets strategy in March 2024 and a real estate LTAF last year.
Aviva Investors is one of a number of asset managers to have embraced the LTAF regime, which aims to help investors such as defined contribution (DC) pension schemes invest in long-term illiquid assets.
Earlier in November, Fulcrum Asset Management launched its second LTAF, while Schroders, Carne Group and Legal & General have all received approval for LTAFs this year.
WTW’s master trust, LifeSight, has used the LTAF structure to access private equity, as has the HSBC Bank (UK) Pension Scheme.
“With more retirement savings represented by DC pension funds which have specific liquidity needs, the emergence of the LTAF regime makes it easier for these investors to allocate more to private markets,” said Aviva Investors chief distribution officer Jill Barber in a press release.
‘A key growth area’
Research indicates growing enthusiasm among pension schemes for real assets. In January, Aviva published the results of a survey of 500 institutional investors, which revealed that 69% of corporate DC schemes anticipated boosting their allocations to real assets over the subsequent two years. This finding had risen from 51% of those surveyed in the previous year.
“Private debt is a key growth area for us,” said Aviva Investors chief investment officer Daniel McHugh in a press release.
According to Carne research published in November, 78% of UK and US asset managers with a European presence are weighing up launching an LTAF.
Despite the growing interest among schemes for private markets, just 18% of DC schemes have access to private markets through an LTAF or European Long-Term Investment Fund (ELTIF), Carne found.
The rush towards private assets takes place against a political backdrop that is encouraging greater pensions investment in UK assets such as real estate and infrastructure.
Earlier this month, chancellor Rachel Reeves used her Mansion House address to reiterate the government’s desire for consolidation in the DC market, which alongside LGPS consolidation could channel £80bn into private equity and infrastructure projects, she said.
