Long-term asset funds (LTAFs) offer access to illiquid private assets and are regulated by the Financial Conduct Authority. Retail investors can buy LTAFs through ISAs starting in April 2026. However, limited interest from investors, advisors, and fund managers is hindering LTAF adoption.

Investment platforms face obstacles in offering LTAFs, including limited interest, technology challenges, resource constraints, and regulatory concerns. UK retail investors show lower adoption of private-market instruments due to education, access, and risk appetite barriers. Standardized risk and liquidity disclosures could boost awareness.

LTAFs are hybrid fund structures providing access to illiquid private assets. Managed by designated alternative investment fund managers, LTAFs require at least 50% investment in unlisted securities. Shares can only be redeemed at preset intervals, with notice periods and liquidity controls in place. Operational complexity adds to onboarding challenges for investment platforms.

Investors can access LTAFs through defined contribution pension schemes, self-invested pension funds, and certain investment platforms. LTAFs offer diversification beyond public companies and potential for higher returns. However, advisors should ensure clients understand risks like liquidity, fees, and leverage associated with LTAFs.

Key providers of LTAFs in the UK include Aviva Investors Real Estate Active LTAF, Schroders UK Private Assets LTAF, and WS Fulcrum Diversified Private Markets LTAF. Morningstar’s investment data covers performance, fees, and redemption conditions of LTAFs. Regulators have approved over 20 LTAFs in the UK, offering a range of investment opportunities in illiquid assets.

Read more at Morningstar: What’s the Latest on Long-Term Asset Funds?