Hargreaves Lansdown is launching Long-Term Asset Funds (LTAFs) in partnership with Schroders Capital, allowing retail investors to access private, unlisted assets through Self-Invested Personal Pensions (SIPPs). This initiative marks a significant development in the UK investment landscape, aiming to democratize access to previously institutional-only private market opportunities, while also highlighting inherent liquidity risks.

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In a significant development for the UK investment landscape, Hargreaves Lansdown (HL) has partnered with Schroders Capital to offer Long-Term Asset Funds (LTAFs) within its Self-Invested Personal Pensions (SIPPs). This move, set to commence the week of September 15, broadens retail investor access to private, unlisted assets, a segment historically dominated by institutional and high-net-worth individuals.

The Event in Detail

Hargreaves Lansdown will make available two Schroders Capital-managed private markets LTAFs on its platform. These funds will provide eligible investors with exposure to global private equity and energy transition infrastructure. The initial offerings include the Schroders Capital Global Private Equity LTAF, focusing on over 270 private companies in technology and healthcare, and the Schroders Capital Global Energy Infrastructure LTAF, investing in approximately 180 assets supporting the energy transition, such as wind farms, solar parks, and battery storage projects.

LTAFs, a structure introduced by the Financial Conduct Authority (FCA), are designed to hold long-term, illiquid assets like private equity, infrastructure, venture capital, and real estate. Unlike traditional daily-traded mutual funds or ETFs, LTAFs typically allow redemptions only at set intervals, such as monthly or quarterly, often requiring a 90-day notice period. The minimum investment for these LTAFs through HL will be £10,000, with access limited to investors qualifying as high net worth or sophisticated.

Analysis of Market Reaction

This initiative by Hargreaves Lansdown represents a pivotal step in democratizing access to private markets. Traditionally, these investments have been largely reserved for institutional investors due to their illiquid nature and higher risk profile. The introduction of LTAFs in SIPPs is aligned with broader regulatory efforts by UK Regulators to channel more capital into long-term projects, including those vital for the energy transition.

While offering potential for high returns and diversification beyond public markets, LTAFs inherently carry significant liquidity risks. The FCA has emphasized that these products are not suitable for the mass retail market, stressing the need for investors to possess the necessary knowledge, resources, and a long-term investment horizon to manage the associated risks. The structure of LTAFs, with their infrequent trading windows and notice periods, is specifically designed to manage the illiquidity of the underlying assets.

Broader Context & Implications

The move by Hargreaves Lansdown fits into a growing global trend of "retailization" in private equity. Recent regulatory shifts, such as the U.S. Securities and Exchange Commission's (SEC) decision to remove the 15% Net Asset Value (NAV) cap on private fund investments in retail closed-end funds and the inclusion of private assets in 401(k) plans, have unlocked substantial retail capital for private markets. By 2025, it is projected that over 20% of private fund inflows could originate from retail investors, a stark contrast to previous institutional dominance.

This shift presents both opportunities and challenges. For retail investors, it opens doors to unique growth opportunities that can enhance portfolio diversification. For the broader market, it could drive significant capital into alternative assets, benefiting sectors like infrastructure and technology. However, it also necessitates increased investor education regarding the higher risks, particularly illiquidity and potential for loss, associated with private market investments.

Expert Commentary

Emma Wall, head of platform investments at Hargreaves Lansdown, underscored the significance of the development:

Our business has been built upon the mission to democratise investing and we see this as a milestone for the accessibility of private markets. For retail investors with a long-term investment horizon, the appropriate knowledge and resources, and as part of a well-diversified portfolio, private markets can play an important role in delivering unique growth opportunities beyond what is typically available in public markets.

James Lowe, director of private markets at Schroders Capital, echoed this sentiment:

This marks a watershed moment for the accessibility of private markets for eligible retail investors in the UK. Our partnership with Hargreaves Lansdown combines the best of Schroders Capital's global private markets expertise with HL's innovative, digital led approach.

Looking Ahead

The introduction of LTAFs in SIPPs by Hargreaves Lansdown is a pioneering step in the UK. Furthermore, the government has announced that LTAFs will be eligible for inclusion within Stocks & Shares ISAs from April 2026, potentially further expanding their reach to a broader segment of retail investors. This future development could significantly increase capital flows into UK growth companies and long-term projects.

The ongoing evolution of the private markets landscape, driven by regulatory reforms and technological innovation, suggests that the "retailization" trend is likely irreversible. Key factors to watch in the coming months and years include the pace of retail adoption, the effectiveness of investor education initiatives, and further regulatory adjustments aimed at balancing accessibility with investor protection in these less liquid asset classes.