Aviva Investors has added a private debt offering to its suite of long-term asset funds (LTAF).
The new fund brings Aviva’s LTAF range to three with the Multi-Sector Private Debt product joining real estate and climate transition focused funds which are designed to make it easier for retail investors such as defined contribution (DC) pension scheme members to invest in illiquid assets.
The new LTAF received an initial GBP750 million of investment capital from the asset manager’s My Future Focus default DC pensions solution, and the asset manager expects other workplace schemes to follow suit.
Daniel McHugh, Chief Investment Officer at Aviva Investors, says:“Private debt is a key growth area for us, and we believe our multi-sector approach will best-capture relative value through the market cycle. This should give it potential to deliver strong risk-adjusted returns and diversification to pension schemes, whilst also meeting their liquidity needs.”
The first LTAF received Financial Conduct Authority (FCA) approval in March 2023, with a view to allowing retail investors move avenues to invest in illiquid assets.
2024 has seen something of a flurry of LTAF releases. This November, Fulcrum Asset Management announced it had received regulatory approval for its first commingled Long Term Asset Fund.
The WS Fulcrum Diversified Private Markets LTAF is the firm’s second LTAF following the launch its first offering on behalf of a single-employer UK DC pension scheme earlier this year.
The latest fund is an open-ended UK OEIC targeting long term capital growth via exposure to a diversified mix of private assets including value-add real estate, value-add infrastructure, natural resources, alternative credit and private equity including venture capital.
And this September, Schroders received approval for is Capital UK Innovation LTAF which will invest in early-stage UK life science and technology companies that align with eight key innovation themes: artificial intelligence, cybersecurity, fintech & payments, consumer, infrastructure software, vertical SaaS, oncology and biotech discovery platforms.
This is the first venture capital LATF to hit the market.
The rush to market for LTAFs follows increasing demand from DC schemes for suitable vehicles in which to channel assets to private markets.
An Aviva survey published this January found more than two-thirds (69 per cent) of DC pension funds expect to increase allocations to real assets over the next two years, up from 51 per cent a year earlier.
A second survey of institutional investors conducted by Carne Group in 2024 reports that more than three-quarters (78 per cent) of DC schemes expect the level of investment into private markets by wealth managers in the UK and Europe to increase over the next three years because of LTAF opportunities, 31 per cent of whom forecast a dramatic rise.
The Investment Association’s Imran Razvi expects to see more LTAFs launched, notably those focusing on single asset classes.
He says: “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.”
