Chancellor Rachel Reeves announced that long-term asset funds (LTAFs) will be allowed in stocks and shares ISAs starting April 6, 2026, providing new investment opportunities for ISA investors. LTAFs offer exposure to private equity, venture capital, and infrastructure assets, giving investors access to previously restricted investment vehicles and potential tax benefits.

LTAFs are hybrid fund structures designed to offer access to illiquid assets like private equity and venture capital. These funds are regulated by the FCA and aim to broaden retail investors’ investment options. LTAFs are seen as a way to enhance long-term investor outcomes and encourage investment in less-liquid assets such as infrastructure projects and growth markets.

Retail access to LTAFs has expanded since July 2023, allowing advised retail investors, direct retail investors, self-select DC investors, and non-advised policyholders to invest in these funds. However, access is still limited due to slow progress by investment platforms and technological constraints. The transition to the Consumer Composite Investments rules poses challenges for platforms.

LTAFs are expected to become available in stocks and shares ISAs from April 2026, accelerating their appeal to investors. Regulatory developments may further enhance the adoption of LTAFs, offering new investment avenues for retail and pension investors. Inclusion in self-invested pension products as standard investments could drive growth in this sector.

Investment trusts provide an alternative to LTAFs for retail investors seeking exposure to unlisted assets. These trusts offer easy access to illiquid assets and have a well-established track record in the UK market. However, differences in pricing mechanisms and liquidity profiles between LTAFs and investment trusts should be considered when making investment decisions.

Read more at Morningstar: What is a Long-Term Asset Fund?