Legal & General (L&G) has announced the launch of the L&G Private Markets Access Fund, offering its 5.2 million defined contribution (DC) members the opportunity to access the benefits of diversified private markets exposure.

It will aim to provide DC investors with access to the “long-term growth potential of private markets and greater diversification through exposure to investments” that are not typically accessible through public markets, the firm announced.

Traditionally, DC investors have faced operational, liquidity and governance challenges to investing in private markets through a structure which offers daily pricing and dealing, L&G said.

The launch of the fund is, therefore, a “critical milestone in the evolution and democratisation of the private markets asset class”, enabling scale of access for UK DC savers, while maintaining an appropriate liquidity profile to manage capital flows on a daily basis, it added.

The fund offers DC investors a single point of access to a diversified portfolio of private market assets, seeking to capture the illiquidity premium in asset classes including private equity, real estate, private credit and infrastructure.

It has the ability to invest across L&G’s own private markets capabilities, as well as those available through individual securities and third-party strategies, providing exposure to investment themes such as clean energy, affordable homes, university spin-outs and critical infrastructure, the firm stated.

The fund’s development contributed to L&G’s decision to become a founder signatory of the Mansion House Compact, an initiative launched in July 2023 to enable greater DC access to unlisted UK companies.

L&G’s strategy will include allocations to unlisted equities as part of a diversified private markets multi-asset portfolio, with the ability to allocate up to 40% into UK assets, it said, adding that the fund has already received interest from the London Stock Exchange Group, EDF Energy and L&G’s own DC pension scheme.

The announcement follows L&G’s recent strategic update in which the group announced it would bring together its public and private markets capabilities in a single asset management division and target growth in its workplace DC pensions business.

António Simões, L&G’s group chief executive officer, said: “Today’s launch is an important step forward in putting UK pension capital to work to drive economic growth while supporting people to build the savings they need for retirement.

“Building on our refreshed strategy set out in June, this fund will offer defined contribution scheme savers access to high-growth investment opportunities, provide innovative funding for communities, society and the real economy, and power L&G’s private markets growth ambitions.”

Designed specifically for DC schemes, the fund is innovatively structured as a fund of funds, with an investment in a new private markets Long Term Asset Fund (LTAF), the Legal & General Private Markets LTAF, sitting alongside exposure to liquid securities, as well as L&G and third-party funds.

This structure enables the fund to deliver liquidity for daily dealing in normal dealing conditions. DC schemes will be able to invest in the fund directly or via the L&G Lifetime Advantage Funds, L&G’s new range of target date funds.

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