L&G unlocks private markets access for 5.2 million DC members through launch of Private Markets Access Fund

• Launch of the Fund marks a significant milestone for UK pensions, providing DC members with exposure to the illiquidity premium and growth potential of private markets
• L&G will utilise its £48bn private markets platform¹ to offer potential investment opportunities such as clean energy, affordable homes, university spin-outs and critical infrastructure
• L&G anticipates the Fund will drive greater engagement among DC members with their pension
• The Fund will be available for DC schemes to invest in directly and via the newly launched L&G Lifetime Advantage Fund default strategies

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

The Fund 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.

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

L&G’s 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. Underlying strategies such as the L&G NTR Clean Power (Europe) Fund and the L&G Build to Rent Fund will be available for inclusion in the Fund, with all asset allocation decisions made by L&G’s multi-asset team, subject to their fiduciary duty that aims to invest in the best interests of clients.

L&G has been working to bring the Private Markets Access Fund to market since 2022, with the intention of delivering greater DC member access to the potential benefits that private markets can provide. 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.

The Fund has already received considerable interest from clients, including the London Stock Exchange Group, EDF Energy and L&G’s own DC pension scheme, indicative of the untapped demand and appetite for private market exposure by DC funds.

The announcement builds on L&G’s recent strategic update, shared at a Capital Markets Event in June, in which the Group announced that it would bring together its public and private markets capabilities in a single Asset Management division and target growth in its Workplace Defined Contribution pensions business.

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.  

Launched today, the L&G Lifetime Advantage Fund range seeks to improve members’ retirement outcomes through a 100% allocation to growth assets, including a meaningful allocation to private markets via the L&G Private Markets Fund, in the earlier years of their savings journey. The fund range is designed to evolve as members’ needs change in the run-up to retirement, with members staying in one fund throughout their retirement journey during which the Fund’s asset allocation will evolve.

References

¹AUM data as at 31 December 2023.