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Schroders to Launch Climate Change Focused Private Assets LTAF Solution for UK Pensions

Schroders to Launch Climate Change Focused Private Assets LTAF Solution for UK Pensions

FILE PHOTO: A Schroders sign is seen outside a building in the City of London, Britain, March 22, 2013. REUTERS/Toby Melville
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Schroders Capital, the specialist private markets investment division, announces the launch of Schroders Capital Climate+ LTAF, a Long-Term Asset Fund (LTAF), designed to help UK pension fund investors support the net zero transition.

This builds on the news earlier this month that Schroders had received regulatory approval to launch the UK’s first LTAF, an open-ended investment vehicle designed to enable a broader range of investors with longer-term horizons to invest efficiently in illiquid and private assets.

Cushon, a UK master trust leading the way on integrating sustainability into its investment strategy, is the strategy’s founding investor.

The core impact objective of Climate+, a diversified multi-private assets solution, is to contribute positively to climate change and support the transition towards net zero economies through its investments. The strategy will aim to invest across four long-term themes; climate mitigation, climate adaption, biodiversity/natural capital and social vulnerabilities.

Benefitting from a global investment mandate, the strategy will allocate to infrastructure, real estate, private equity, natural capital and biodiversity-focused assets, through a mixture of Schroders Capital and externally-managed funds.

Schroders Capital will also leverage the extensive experience of impact investing pioneer BlueOrchard, acquired in 2019, to deliver a high impact strategy, aligning to the Operating Principles for Impact Management (OPIM).  

With $91 billion of assets under management, Schroders Capital provides investors with access to a broad range of private asset investment opportunities. The strategy may obtain exposure to underlying assets through segregated accounts, as well as direct, secondary and co-investments.

See related article: Schroders Capital Launches UK Real Estate Impact Fund

It will also operate a robust liquidity management framework with a focus on managing excess cash and investing in more liquid assets. The Schroders Group is already a market leader in offering structures which provide greater access to private assets through its range of listed vehicles, as well as semi-liquid and illiquid structures.

Tim Horne, Head of UK Institutional Defined Contribution (DC), Schroders commented:

“Opportunities for UK DC savers to benefit from the returns private assets can bring have traditionally been very limited. The launch of the Climate+ strategy will enable investors to take advantage of the diversification and performance private assets can deliver, as well as the sustained momentum now being directed towards the global transition to net zero and green economies.

“It is a testament to our focus on meeting the needs of investors in this space that we have been able to launch this strategy so quickly after receiving regulatory approval to launch the UK’s first LTAF.”

David Seex, Head of Private Asset Solutions, Schroders Capital, commented:

“Climate change is one of the most pressing issues of our time and private assets have a role to play in financing the Just Transition we must make. Pension savers want the opportunity to participate in tackling this generational change, as well as generate sustainable returns in their retirement pools.

“Climate+ provides a single access point to a diversified multi-private asset portfolio of investments which directly target the adaption to, and mitigation of, climate change. Schroders Capital is dedicated both to innovating and making a difference.”

Julius Pursaill, Cushon’s Strategic Adviser, said:

“This new strategy demonstrates the leading role pensions can play in supporting the move towards net zero and a more sustainable economy. We are delighted to be working with Schroders as a founding investor. Our research shows that members are far more engaged in their pensions if investments are aligned to their values and greater engagement leads to better outcomes in retirement.

“Pensions can be a force for good for both people and planet – this new strategy is a major leap forward for the industry.” 

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