Long Term Asset Funds (LTAFs) are UK‑authorised vehicles offering experienced investors periodic access to private markets—private equity, private credit, infrastructure, and real estate—intending to enhance diversification and long‑term growth prospects by forgoing daily liquidity.
For a long time, significant players such as pension funds and large organizations were the only entities permitted to make private investments in infrastructure, real estate, private debt, and private equity.
However, this changed in 2021 when the Financial Conduct Authority (FCA), the UK’s financial regulator, introduced a new type of fund called the Long-Term Asset Fund (LTAF).
What are Long Term Asset Funds (LTAFs) ?
With LTAFs, more seasoned individual investors will have access to the more illiquid investment options available in private markets.
They provide investors access to assets that aren’t listed on the stock exchange, which may help diversify a portfolio and open up new growth prospects.
LTAFs provide more flexibility than many other private market funds, which limit your access to your money for a certain period of time. However, they remain less versatile than daily-dealing open-ended funds.
They are more accessible than other methods of accessing private markets since you may invest or withdraw money at predetermined periods, often once a month or once every quarter, while still maintaining the long-term character of the underlying assets.
It is not personal advise in this post. whether you are unsure whether investing is the correct choice for you, please see a professional. Only a tiny portion of a diversified portfolio should consist of long-term asset funds, which are regarded by seasoned investors as high-risk investments. You can get less than what you invested if you decide to invest since the value of your money will fluctuate.
One factor to consider with LTAFs is that investor returns may be greater than those from traditional investpmtns when taking into account the types of opportunities that exist in potentially mining the private market world. But of course, returns are greater with other more complex opportunities carrying more risk.
And because the underlying assets in the funds are illiquid, your money could remain locked up longer than in more traditional funds, and market conditions can have a big impact on performance. It’s also a good idea to check your own financial goals, risk tolerance and investment horizon before you put money in LTAFs.
With that said, by consistently revisiting your portfolio and becoming aware of market conditions, you’ll be in a much better position to make decisions and manage risk.
What are the benefits of investing in LTAFs?
Getting access to fresh possibilities
With LTAFs, you may invest in private ventures that were previously exclusive to big institutions. These industries, which include biotech, finance, artificial intelligence, and renewables, may be influencing our future.
Possibility of more diversity and greater returns
LTAFs may help you diversify your assets, access sectors with significant development potential, and reduce your exposure to fluctuations in public markets.
Efficiency of taxes
LTAFs may already be held in Innovative Finance ISAs and Self-Invested Personal Pensions (SIPPs).
But starting in April 2026, investors will also be able to use a Stocks & Shares ISA to invest in LTAFs. Benefits and tax laws are subject to change based on your specific situation.
Reduced minimum investment requirements
LTAFs are more accessible to individual investors since they often have lower minimum investment levels than many conventional private market funds.
What are the risks of investing in LTAFs?
Every investment has the risk of loss, and private market investments are often riskier.
Liquidity Risk
Private markets are less liquid than public markets, therefore investments cannot be bought or sold as rapidly.
LTAFs address this by allowing you to invest or withdraw funds only once a month or quarter, with up to 90 days’ notice required.
This allows fund managers to plan ahead and avoid selling assets at an inopportune moment.
So, before investing, think about how readily you’ll need to access your money and if it aligns with your financial objectives.
Redemption Caps
There are ‘liquidity management tools’ built-in.
For example, if several investors wish to take big sums at the same time, the fund might restrict withdrawals to safeguard all investors.
This is frequently referred to as a’redemption cap’ and is typically set at 5% of the fund’s value.
If the total requested withdrawals exceed 5%, all investors will be’scaled back’ and get a fraction of the amount they want to take. Redemption limitations, levies, or refusals may be imposed at the manager’s discretion if judged in the best interests of current investors. Limits on new subscribers and investors may also be imposed.
To assist settle withdrawals, fund managers maintain certain assets in cash or in easy-to-sell investments.
What are the main challenges of investing in LTAFs?
Even while LTAFs let you invest in private markets, not everyone should use them. An LTAF may not be the ideal option if you believe you might require immediate access to your funds.
Experienced investors with a long-term perspective who can live with the fact that they don’t have daily access to their investment are better suited to consider them.
Compared to conventional assets like stocks or bonds, private markets have various risks and methods of operation.
Additionally, their structures may be more intricate.
Before making an investment, it’s crucial to do research and confirm that you are at ease with these aspects.
Yet, LTAFs could be a choice for those who want to diversify their assets outside of the stock market and get access to markets that were previously exclusive to big institutions.
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