Mercer UK’s master trusts are making an initial £350m investment into Schroder’s new Long-Term Asset Fund (LTAF) that offers investors access to a flexible, diversified corporate credit strategy that invests selectively from across a broad spectrum of public and private corporate credit.
The LTAF, which is expected to go live in the first quarter of 2026, will be launched by Schroders Capital, under Schroders Capital’s LTAF umbrella, with Future Growth Capital Limited serving as the delegated investment manager.
The new LTAF will become the primary vehicle for private market allocations across Mercer UK’s workplace savings solutions, including the Mercer Master Trust and the NOW: Pensions Master Trust.
Mercer said the ELTAF supports the trustee boards’ ambitions to allocate at least 10% of default pension fund assets to private markets by 2030, with a minimum of 5% invested in the UK.
It added that as signatories to the Mansion House Accord, the trustee boards recognise the significant potential of investing in private markets with the aim of delivering strong returns and better outcomes for their members.
Mercer added that the LTAF will sit within the master trusts’ growth portfolios and will initially focus its illiquid investments in private equity and infrastructure equity. These are the asset classes the trustee boards believe are best placed to deliver strong, long-term returns for members, while bolstering retirement outcomes and increasing diversification across the master trusts’ portfolios.
The LTAF will also hold listed equities to meet liquidity requirements, and it intends to allocate a meaningful share of its investments to UK-based growth opportunities.
Phil Parkinson, Mercer UK’s wealth practice leader, said: “Private markets have moved from the margins to the mainstream – adding diversification and innovation. The LTAF aims to provide access to growth-focused private equity and infrastructure equity assets, helping to enhance long-term returns and support better retirement outcomes.”
Susan Langley, Lady Mayor of the City of London, added: “Mercer and NOW: Pensions are taking real steps to deliver on the ambition of the Mansion House Accord.
“A commitment of this size to a long-term vehicle focused on UK growth will help deliver better returns for savers and strengthen our position as one of the world’s most competitive investment markets. It reflects a great confidence in Britain’s future.”
Schroders Capital’s €100m seed capital in own ELTIF
Separately, Schroders Capital has launched a semi liquid high income credit European Long-Tem Investment Fund (ELTIF) and is investing up to €100m of seed capital.
The launch of the fund reflects the ongoing convergence of public and private credit markets into one asset class, or ‘corporate credit continuum’, allowing European investors to benefit from relative value opportunities among high yield bonds, syndicated loans and European senior secured private loans, the firm stated.
Schroders Capital has detailed that the fund will allocate its cash flows towards the most compelling risk-adjusted, idiosyncratic opportunities across this continuum in real-time as market opportunities and risks evolve.
The firm claims that by investing in a broad spectrum of credit assets, the portfolio has the potential to deliver attractive and robust income, yield, enhanced diversification and alpha from a broad and wide-ranging investment universe. Combining high-yield bonds, syndicated loans and private loans can harness the beneficial characteristics of each type of corporate credit in a diversified way.
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