Defined contribution (DC) pension experts expect the number of Long-Term Asset Funds (LTAFs) to increase “significantly” over the next few years, according to research from the DC Investment Forum (DCIF).

According to the group, one platform suggested that it was in touch with 20-30 investment managers that are at various stages of developing LTAFs, whilst another said that it is aware of several LTAFs sitting with the Financial Conduct Authority for approval.

Indeed, commenting in the report, Investment Association (IA) senior policy adviser, Imran Razvi, said that while there is no pure number expectation for LTAFs, there are “a number” in the pipeline.

“We do expect to see more launched,” he said. “I think our sense is the LTAFs that are currently available are more of a multi-asset, one stop shop approach to private markets. But increasingly you might see more asset class specific products as well.

“The retail side hasn’t had the same level of exposure or penetration as defined contribution (DC).

“But again, we’re starting to hear about firms thinking about products for that part of the market. It could well be that retail and DC vintages look a bit different depending on what wealth managers and advisers, as well as retail investors, want.”

According to the report, pension schemes are also monitoring developments with interest, with all of Mobius Life’s clients interested, and all those with more than £1bn of assets under management either working on private markets solutions or having already added private markets to their portfolios.

Whilst the DCIF warned that schemes want to access private markets in different ways, creating challenges for asset managers, it argued that, as schemes grow, they are likely to reach more of a consensus about how they want to access private markets, making it easier for asset managers to innovate. a

It also argued that while barriers do still exist to private markets, they are coming down, aided by the advent of LTAFs, creative thinking among the pensions community, and ultimately, scheme demand.

DCIF chair, Mark Austin, commented: “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.”

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