“The Mansion House Compact has served as an important moment for the democratisation of private markets for UK pension savers. While pension schemes have allocated to private markets for some time, the Compact has catalysed these initiatives. Our latest research shows that UK and European DC schemes are planning to increase their allocations to private equity, private credit, infrastructure and other private market strategies meaningfully over the next five years.¹

“With DC schemes looking to increase their allocations to private markets considerably, investment managers are taking note and actively expanding their proposition in private markets across the European continent. For the UK, this has been further enabled by the introduction of the Long-Term Asset Fund (LTAF) structure. Since its introduction two years ago, we have seen a significant rise in fund managers launching these types of funds, and our research highlights the increasing demand for them. 78% of the UK and European DC schemes we surveyed expect the DC sector’s use of LTAFs and ELTIFs as a means of accessing private markets to grow over the next three years, with 31% expecting that increase to be ‘dramatic’.

“The regulatory landscape is evolving and supportive of the democratisation of private markets; however, managing liquidity, asset valuation, ESG scrutiny and novel fund structuring remain key challenges for investment managers looking to scale private market propositions in Europe. Moreover, many of the global asset managers we surveyed expect regulatory scrutiny in the UK and Europe to become more complex over the coming years.

“As a result, we’re seeing a significant rise in asset managers turning to third-party specialists who can support them in navigating and complying with the private market regulatory regime. For managers to remain competitive in this space, we need to ensure that the industry is working together to achieve the correct balance of investor protections and a streamlined process for asset managers to invest in the UK.”

¹ Research commissioned 51 UK and European DC pension schemes collectively managing $317 billion in AUM. The study was conducted in May 2024 by the market research company Pureprofile.