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LTAF assets soar

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BlackRock has added to its Long Term Asset Fund (LTAF) range with the launch of a Diversified Alternative Strategies vehicle seeded by its own defined contribution (DC) scheme and that of another unnamed global financial services firm.

Assets under management for the UK’s LTAF sector soared to GBP7.3 billion by April 2026 climbing from GBP5 billion in June 2025, according to figures from Morningstar, as retail investors seek viable ways to access private markets.

Tej Patel, DC Director at consultancy Mercer which advises BlackRock’s DC scheme, said: “We have worked closely with BlackRock’s UK Retirement Savings Plan to integrate a 20 per cent allocation to private markets within the default strategy. We see private markets as an important component in enhancing diversification and return potential, with the aim of supporting improved member outcomes in retirement.”

More than two-thirds (69 per cent) of UK DC pension schemes plan to invest in LTAFs, according to research from Schroders published this February, with Morningstar noting there is GBP3.1 billion of committed capital yet to be deployed to the vehicles.

The dash to private markets follows a well-publicised push from government to drive billions of pounds of retirement savings into growth assets, primarily those based in the UK.

Ryan Taylor, Head of DC at Schroders, which was the first asset manager to enter the LTAF fray, said the market is still nascent and predicts huge growth driven by DC schemes.

“Since we launched the first LTAF, 22 or 23 other funds have joined the market since then, and over GBP7 billion invested. That is just the start. Whilst we have seen notable launches, these are not yet up to scale. The current GBP7 billion is going to grow significantly over the years to come.”

Taylor says pension investors are increasingly comfortable with the LTAF structure as a means of investing in illiquid assets while still meeting daily pricing commitments to members.

“We spent the first 18 months of launching the LTAF talking about liquidity, rather than talking about the assets. This because the structure of a DC scheme means that there are daily transactions. Whilst an individual doesn’t need to trade every day, lifestyle structures mean some members need to derisk frequently. However, that doesn’t mean you need huge liquidity. If you look at the Schroders DC pension scheme, the default fund is 80 per cent liquid and 20 per cent LTAF. This allows for daily liquidity alongside the benefits of investing in illiquid assets.”

Taylor also argues that DC schemes are less concerned about the traditionally high fees associated with private markets investing, noting that the focus is changing to value rather than cost.

He said: “More trustees are comfortable with paying performance fees because, one, they’re outside the charge cap allowance. Two, there is evidence that doing underlying deals within the fund that has performance fees can produce better outcomes.”

This shift in mindset reflects yet more government intervention in the UK pensions sector. The value for money framework developed by the Financial Conduct Authority, Department for Work and Pensions, and The Pensions Regulator which is expected to be implemented later this year, will demand DC pension schemes focus on delivering long-term value for members rather than on low cost.

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