Phil Parkinson: Private markets have moved from the margins to the mainstream
Mercer has announced its UK workplace savings solutions, including its master trusts, is set to commit to a newly-launched Schroders Mercer Private Assets Growth long-term asset fund (LTAF) in a bid to increase members’ access to private market investments.
Mercer said the LTAF is expected to receive an initial investment commitment of £350m from Mercer UK's master trusts in its first year, with further commitments to follow.
The LTAF is anticipated to go live in the first quarter of 2026, subject to regulatory approval from the Financial Conduct Authority.
The LTAF will be launched by Schroders Capital, under the Schroders Capital Long-Term Asset Funds umbrella, with Future Growth Capital serving as the delegated investment manager.
Representatives from Mercer will also participate in a joint investor advisory committee to provide ongoing governance.
It will allocate capital to underlying investment mandates provided by Mercer and Schroders Capital, as well as third-party investment managers, where deemed appropriate.
The new LTAF will become the primary vehicle for private market allocations across Mercer UK's Workplace Savings solutions, including the Mercer Master Trust and the Now Pensions Master Trust.
It supports the trustee boards' ambitions to allocate at least 10% of default pension fund assets to private markets by 2030, with a minimum of 5% invested in the UK.
Mercer said that, as signatories to the Mansion House Accord, the trustee boards recognise the significant potential of investing in private markets with the aim of delivering strong returns and better outcomes for their members.
The LTAF will sit within the master trusts' growth portfolios and will initially focus its illiquid investments in private equity and infrastructure equity.
Mercer said these are the asset classes the trustee boards believe are best placed to deliver strong, long-term returns for members, while bolstering retirement outcomes and increasing diversification across the master trusts' portfolios. The LTAF will also hold listed equities to meet liquidity requirements, and it intends to allocate a meaningful share of its investments to UK-based growth opportunities.
Mercer UK wealth practice leader Phil Parkinson said: "Mercer, combined with the Now Pensions Master Trust, collectively manages billions of assets and has global private markets research and implementation capabilities. Working together allows both master trusts to have larger allocations to private market asset classes with the potential for higher returns."
He added: "Private markets have moved from the margins to the mainstream – adding diversification and innovation. The LTAF aims to provide access to growth-focused private equity and infrastructure equity assets, helping to enhance long-term returns and support better retirement outcomes."
