Future Growth Capital: Private markets are essential building blocks to deliver better pension outcomes
Future Growth Capital (FGC) has formally launched two diversified private market long-term asset funds (LTAFs) – a global strategy and a complementary UK strategy.
The private markets investment manager – set up by Schroders and Phoenix Group in July last year – said the Schroders Future Growth Capital UK Private Assets LTAF and the Schroders Future Growth Capital Global Private Assets LTAF both offer actively-managed, diversified private markets exposure and target a 10% investment return after fees per annum.
The formal launch comes after the two LTAFs received regulatory approval in October last year.
The Global LTAF focuses on providing diversified, managed exposure to assets from private markets in the US, Europe and Asia, to capture the extra return potential of global private markets, in a blended strategy aiming to deliver a smoothed long-term risk and return outcome.
The UK LTAF for the first time offers investors the opportunity to take advantage of the investment opportunities available in UK private enterprise and UK development projects – offering investors a way to balance and diversify their public market portfolios as well as the opportunity to participate in the UK's energy transition.
FGC said the UK LTAF had now made its first investment in line with the aims of the UK Government's Long-Term Investment for Technology and Science (LIFTS) initiative – also noting The British Business Bank has invested £250m into the LTAF under this LIFTS initiative.
FGC chief executive Paul Forshaw said: "We're excited to be launching these two strategies, designed to unlock private market investments for UK pension savers, efficiently and cost-effectively. By offering complementary global and UK LTAFs side by side we are giving investors the option to decide exactly what their UK and global private markets exposures should be, at a time when investment allocations to the UK are increasingly in focus."
Chief investment officer Ped Phrompechrut added: "Private markets are essential building blocks to deliver better pension outcomes. Often overlooked is that UK private markets are broader and deeper than many recognise and offer a rich seam of investment return potential.
"The UK is a hub of innovation, the third largest venture capital market in the world, and the leading supplier of unicorn businesses in Europe. There are great investment opportunities for investors, and we aim to capture these for UK pension savers, alongside providing access to a global strategy.''
FGC aims to deploy £10-20bn over the next decade into private markets – with Phoenix Group saying it intends to invest 5% of its relevant savings products on behalf of its policyholders via investment products managed or advised by FGC, in line with its Mansion House Compact commitment.
The expanding LTAF universe
The formal launch of the Schroders Future Growth Capital UK Private Assets LTAF and the Schroders Future Growth Capital Global Private Assets LTAF is the latest of a series of announcements in the area.
Earlier today (29 April), Scottish Widows announced it is to launch an open architecture LTAF later this year, pending regulatory approval.
In April, Aegon UK said the Financial Conduct Authority had approved the final two of the three long-term asset funds (LTAFs) it is using to provide private markets access for its main workplace default fund. The two newly-approved strategies are being run by Aegon Asset Management and J.P. Morgan Asset Management. The third strategy is a bespoke, diversified alternative private markets offering, being run by BlackRock.
In March, M&G Investments received regulatory approval for the launch of its first LTAF, the M&G Diversified Private Credit Feeder LTAF.
The Aviva Investors Venture & Growth Capital LTAF, which was launched in February after receiving an initial commitment of around £150m from Aviva. This follows the launch of the Aviva Investors Multi-Sector Private Debt LTAF in November last year with an initial £750m of investment from Aviva's My Future Focus default pensions solution.
Carne Group and WTW secured regulatory approval for the launch of their private equity-focused LTAF, the CG WTW Private Equity Access LTAF, on 15 October 2024.
And Schroders Capital said it had received regulatory approval to launch the first LTAF dedicated to UK venture capital, its UK Venture and Growth LTAF, on 19 September 2024.
In addition to this, Fidelity International said its Fidelity Diversified Private Assets LTAF had received regulatory approval on 6 August 2024; Legal & General announced the Legal & General Private Markets LTAF in July last year, following FCA authorisation in May; and Carne Group and Arcmont Asset Management received regulatory approval in June 2024 for the CG Arcmont Private Credit Europe LTAF.
Other LTAFs that have been launched include Fulcrum's first diversified private markets fund, the WS Fulcrum Diversified Private Markets Long Term Asset Fund, which was approved on 21 March 2024; the Aviva Investors Climate Transition Real Assets LTAF, the launch of which was announced on 20 March 2024; the Schroders Capital Climate+ LTAF, which was launched at the end of March 2023; the Aviva Investors Real Estate Active LTAF, launched on 2 May 2023; and the BlackRock Diversified Alternative Strategies LTAF, which gained Financial Conduct Authority approval on 16 May 2023.
