More than half (62 per cent) of investment firms are now considering Long-Term Asset Funds (LTAFs) or have one in development, despite only 14 per cent of these firms have actually launched an LTAF in the defined contribution (DC) market, WTW research has found.

The survey revealed that although the LTAF regime is still in its early stages, industry appetite is building quickly, with the potential for the number of LTAF vehicles available to grow by as much as four times.

This appetite is similar in the wealth segment, as four firms have launched and another six are actively considering a wealth-focused LTAF.

In terms of the most commonly cited asset class for future LTAF strategies, private debt ranked first, slightly ahead of private equity, reflecting a growing focus on income resilience and a higher-rate environment in portfolio construction.

Commenting on this, WTW investments director, Ellie Lloyd Jones, said: “LTAFs are no longer a fringe concept. But they are not yet a default.

“The data makes clear the intent to implement is firmly in place and the reasons why are clear.”

Jones said that the government expects £25bn to be invested directly into the UK economy by 2030 as a result of the Mansion House Accord, and WTW expect LTAFs to be a “meaningful contributor” to this growth.

“The firms that can bridge that gap, especially for the wealth market, will be the ones who define the next growth phase,” she stated.

“We expect a new, steadier but likely inevitable phase of growth for LTAF offerings, with the majority of major investment managers likely to have a full offering within two-three years.”

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