The LTAF would make it far easier for investors – including those in defined contribution pension plans – to allocate their money to real estate, private equity, infrastructure and other productive assets not normally available to non-professionals. Current proposals envisage at least 50% of the fund in long-term, illiquid assets, which can include loans.
It aims to promote the kind of long-term investment the UK needs if we are to ‘build back better’, with more sustainable and green technologies and buildings, levelling up the economy and creating jobs. FCA chief executive Nikhil Rathi has underlined this, saying: “It is important for overall economic growth that the financial system supports investment that may take time to deliver a return.”
The LTAF also aims to solve the illiquidity mismatch that occurs today when open-ended funds invest in illiquid assets.