The Long-Term Asset Fund is one of the most interesting structural innovations in UK fund regulation in years. Introduced through FCA Policy Statement 21/14 in 2021 [1], it was designed to solve a specific problem: how do you give pension schemes and retail investors access to private markets without creating the liquidity mismatches that blew up open-ended property funds during the 2008 crisis and again in 2020?
The answer is a new type of authorised open-ended fund with built-in redemption restrictions. The LTAF can invest substantially in illiquid assets (private equity, infrastructure, real estate, private credit) while managing investor expectations through mandatory notice periods and limited redemption frequency. For emerging managers, the big draw is that LTAFs can be included as default investment options in UK defined contribution pension schemes [2]. That is a capital source that traditional closed-ended LPs cannot easily access.
How the LTAF works
An LTAF is an authorised fund structure, meaning it sits within the FCA's regulatory perimeter in a way that closed-ended limited partnerships do not. It is open-ended in theory (investors can subscribe and redeem) but with restrictions designed to match the liquidity of the underlying assets.
The key operating requirements [1][3]:
- Redemption frequency: No more than monthly. The FCA expects longer intervals for funds with more illiquid portfolios.
- Notice periods: Minimum 90 days before redemption. Again, the FCA has indicated that longer periods are likely appropriate for heavily illiquid strategies.
- Investment requirement: The FCA expects LTAFs to maintain at least 50% of assets in illiquid investments on an ongoing basis [1]. This is not a temporary allocation target; it is a structural feature.
- Valuation: Regular NAV calculations are required despite the illiquid holdings, which creates operational demands around private market valuation that differ from traditional closed-ended fund administration.
The combination of these features means an LTAF behaves more like a closed-ended fund in practice, but with the regulatory classification and investor access benefits of an authorised open-ended structure.
Why pension access matters
The single biggest advantage of the LTAF for emerging managers is pension scheme eligibility. The Pensions Regulator has permitted LTAFs to be used as default investment options within DC workplace pension schemes, provided they meet specified design and governance criteria [2][3]. This is a direct pipeline to the capital that the Mansion House Accord is pushing into private markets.
UK DC pension assets are enormous and growing. The government's target under the Mansion House Accord is 10% allocation to private assets by 2030 [4]. That translates to tens of billions of pounds flowing into private markets over the next few years. LTAFs are the primary vehicle structure through which DC schemes are expected to make these allocations.
For a traditional closed-ended LP fund, accessing DC pension capital is difficult. Pension scheme trustees are accustomed to authorised fund structures with FCA oversight, regular valuations, and redemption mechanisms, even limited ones. The LTAF gives them all of that while still allowing the fund manager to invest in illiquid private market assets.
Investor base beyond pensions
LTAFs are not limited to pension schemes. They can be marketed to [1][3]:
- Certified high-net-worth individuals -- generally those with net assets exceeding GBP 250,000 (excluding primary residence and pension) or annual income above GBP 100,000 [5].
- Certified sophisticated investors -- individuals who meet FCA criteria for investment experience and knowledge.
- Professional investors -- institutions, family offices, and other qualified buyers.
This is a broader investor base than most closed-ended private capital funds can access. The combination of pension capital, HNW individuals, and institutional investors gives LTAF managers multiple fundraising channels that a traditional LP structure does not offer.
The operational reality
There are real trade-offs. LTAFs are more operationally demanding than limited partnerships in several ways.
Valuation. Regular NAV calculations for a portfolio of illiquid assets require valuation infrastructure that many emerging managers do not have in-house. You need documented valuation policies, appropriate methodologies (DCF, comparable multiples, cost-based approaches), independent validation, and the ability to produce NAVs on the fund's dealing schedule. The FCA's multi-firm review of private market valuation practices has set clear expectations here [6].
Redemption management. Even with 90-day notice periods and monthly dealing, you need liquidity management procedures. What happens when redemption requests exceed your liquid reserves? How do you queue and prioritise? What are the gating mechanisms? These questions need answers in your fund documentation and your operational systems.
Regulatory compliance. As an authorised fund, the LTAF sits within a more intensive regulatory framework than a limited partnership managed by a small registered AIFM. The fund itself needs authorisation, not just the manager. Ongoing compliance, reporting, and FCA interaction are more demanding.
Cost. The combination of authorisation requirements, ongoing compliance, valuation infrastructure, and the operational complexity of managing subscriptions and redemptions means LTAFs cost more to run than a standard LP fund. For a first fund under GBP 50 million, these costs may not be justified unless pension capital is a core part of your fundraising strategy.
When an LTAF makes sense for emerging managers
Not every emerging manager should launch an LTAF. The structure makes the most sense when:
- Pension scheme capital is a meaningful part of your fundraising plan.
- You want to combine institutional and retail/HNW capital in a single vehicle.
- Your investment strategy actually targets long-term illiquid assets (the 50% minimum is not something you want to fight against).
- You have the operational infrastructure -- or a fund administrator with the infrastructure -- to handle the valuation, redemption, and compliance requirements.
If your plan is to raise GBP 20 million from ten institutional LPs for a standard venture fund, a limited partnership is simpler, cheaper, and entirely adequate. The LTAF adds value when you need access to capital sources that an LP structure cannot reach.
Early-stage adoption
As of March 2026, LTAFs remain a relatively new structure. Adoption is in early stages, and the number of launched LTAFs is still small compared to the thousands of limited partnerships in the market [3]. The operational experience base is thin. Fewer advisers, administrators, and service providers have deep LTAF-specific expertise compared to those experienced with LP structures.
This will change as the Mansion House Accord drives more pension capital toward private markets and as the infrastructure around LTAFs matures. Emerging managers who build LTAF capability now will have an advantage as pension allocations scale up over the next several years.
LTAF versus ELTIF
The UK's LTAF was developed alongside the EU's European Long-Term Investment Funds (ELTIF) framework. The two structures serve similar purposes but operate under different regulatory regimes [1]. Since Brexit, they have diverged: the EU recently reduced the ELTIF qualifying investment threshold to 55% and broadened the eligible asset universe. The UK's LTAF framework has its own FCA-specific requirements.
For managers operating across both jurisdictions, the choice between LTAF and ELTIF depends on where your investors are based and which regulatory passport (if any) you need. For UK-focused fundraising, the LTAF is the right structure.
How Infra One supports LTAF administration
We are building our LTAF administration capability to support emerging managers who want access to pension and retail capital. Our fund platform handles the specific operational requirements LTAFs create: regular NAV calculations for illiquid portfolios, redemption processing with notice period management, investor eligibility verification, and the FCA reporting that authorised funds require.
If you are considering an LTAF structure and want to understand the operational requirements and costs, schedule a conversation with our team. We can walk you through whether it fits your fundraising strategy and what it takes to get one up and running.
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