Industry appetite for the long-term asset fund (LTAF) regime is building quickly, although it is still in its early stages, a study by WTW has shown.

While just four wealth firms have launched an LTAF so far, a further six were actively considering launching a wealth-focused LTAF, according to the research.

Polling conducting at WTW’s MiX London forum highlighted that there was potential for up to fourfold growth in the number of LTAF vehicles available across all sectors.

In the pension space, just 14 per cent of asset management firms have launched a LTAF for the defined contribution (DC) market.

However, 62 per cent were either considering launching an LTAF or have one in development, which WTW said indicated the new fund structure can still be expected to undergo significant expansion.

Private debt was emerging as the most commonly cited asset class for future LTAF strategies, just ahead of private equity.

WTW said this reflected a growing focus on income resilience and a higher-rate environment in portfolio construction.

“LTAFs are no longer a fringe concept,” stated WTW director, investments, Ellie Lloyd Jones. “But they are not yet a default.

“The data makes clear the intent to implement is firmly in place and the reasons why are clear. The government expects £25bn to be invested directly into the UK economy by 2030 as a result of the Mansion House Accord, and we expect LTAFs to be a meaningful contributor to this growth.

“The firms that can bridge that gap, especially for the wealth market, will be the ones who define the next growth phase.

"We expect a new, steadier but likely inevitable phase of growth for LTAF offerings, with the majority of major investment managers likely to have a full offering within two-three years.”

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