M&G has launched a diversified private credit feeder long-term asset fund (LTAF) aimed at widening access to its private credit capabilities, with a focus on defined contribution (DC) pension schemes.
The fund aims to provide diversified sources of income and returns while channelling capital into businesses and projects across the UK and European real economies.
It launches with £74m, including capital from M&G’s £138bn With Profits Fund. The launch comes as UK DC pension schemes look to broaden their asset allocations beyond public markets.
The fund aligns with the ambitions of the Mansion House Accord, under which 17 major UK workplace pension providers and schemes have committed to allocating at least 10% of their DC default funds to private markets by 2030, including at least 5% directly to UK private markets.
M&G said the LTAF would give DC pension funds and other professional investors access to a broader range of credit opportunities and returns with low correlation to traditional markets. These include lending to businesses and financing infrastructure, real estate and other assets that can be difficult to access through listed fixed income markets.
The strategy draws on M&G’s private markets and structured credit business, including its experience in sourcing and underwriting investments across market cycles. It follows the firm’s efforts to widen access to private markets through its European fund range, including the M&G Corporate Credit Opportunities ELTIF, which has grown to more than €1bn in assets since 2023.
Neil Godfrey, global head of client group at M&G Investments, said: “As part of a diversified portfolio, private markets can play an important role in pension portfolios by providing returns that are less dependent on equity and bond markets, helping to improve risk-adjusted returns and resilience.”
He added that the LTAF is designed to “support savers throughout their investment journey, helping to grow savings during their working lives while providing a reliable source of income in retirement”.
Simon Iversen, manager of the M&G Diversified Private Credit Feeder Long-Term Asset Fund, said: “As European private and structured credit grows, investors have access to an increasingly broad and diverse range of lending opportunities.
“By taking a disciplined and selective approach – backing the right businesses, with the right structures and terms – we can use our expertise in credit selection, structuring and risk management to identify the most attractive opportunities, target attractive income and build resilient portfolios that can perform across different market environments.”
