Legal & General (L&G) has announced the launch of the L&G Private Markets Access Fund, designed to offer its 5.2 million defined contribution (DC) members the opportunity to access the benefits of diversified private markets exposure.

The fund, which was hailed as a "significant milestone" for UK pensions, will aim to provide DC investors with access to the long-term growth potential of private markets and greater diversification through exposure to investments that are not typically accessible through public markets.

Designed specifically for DC schemes, the fund 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 structure was designed specifically to enable the fund to deliver liquidity for daily dealing in normal dealing conditions.

Announcing the launch, L&G noted that, traditionally, DC investors have faced operational, liquidity and governance challenges to investing in private markets through a structure which offers daily pricing and dealing.

Given this, it argued that the launch of the fund is a "critical milestone" in the evolution and democratisation of the private markets asset class, enabling scale of access, while maintaining an appropriate liquidity profile to manage capital flows on a daily basis.

Indeed, L&G’s fund is designed to offer DC investors a single point of access to a diversified portfolio of private market assets, seeking to capture the illiquidity premium in asset classes including private equity, real estate, private credit and infrastructure.

It has the ability to invest across L&G’s own private markets capabilities, as well as those available through individual securities and third-party strategies, providing exposure to investment themes such as clean energy, affordable homes, university spin-outs and critical infrastructure.

L&G confirmed that underlying strategies such as the L&G NTR Clean Power (Europe) Fund and the L&G Build to Rent Fund will also be available for inclusion in the fund, with all asset allocation decisions made by L&G’s multi-asset team.

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.

Also launched today (1 July), the L&G Lifetime Advantage Fund range will seek 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 group said that it has already received "considerable interest" from clients, including the London Stock Exchange Group, EDF Energy and L&G’s own DC pension scheme, which it highlighted as indication of the untapped demand and appetite for private market exposure by DC funds.

According to L&G, it has been working to bring the fund to market since 2022, with the intention of delivering greater DC member access to the potential benefits that private markets can provide.

The launch also aims to build on L&G’s recent strategic update, which confirmed plans to bring together its public and private markets capabilities in a single asset management division and target growth in its workplace DC pensions business.

Commenting on the launch, L&G group chief executive officer, António Simões, said: “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."

Adding to this, L&G head of DC, Rita Butler-Jones, said: “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.

“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.”

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