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Aegon UK will be using three long-term asset funds for its largest defined contribution default option, as two LTAFs were recently given regulatory approval, and plans to make a cornerstone investment in the British Growth Partnership for venture capital.
The firm said the approval of the LTAFs will keep it “on track to deliver private market investments as part of the overhaul” of its £12bn Universal Balanced Collection default, which serves 700,000 savers.
From the second half of this year, Aegon Asset Management’s private credit LTAF will give Aegon’s default fund exposure to the manager’s private credit strategies, including corporate lending, fund financing, insured credit, renewables and asset backed finance. In addition, the default will be using JP Morgan Asset Management’s LTAF later this year, which offers a bespoke strategy containing private equity, infrastructure, transportation and forestry. Carne Group will be the authorised corporate director of the two newly added LTAFs.
BlackRock has been managing a bespoke diversified alternative private markets strategy for Aegon UK since October last year. This includes a mix of private equity, private debt, real estate and infrastructure.
Lorna Blyth, managing director of investment proposition at Aegon UK, said: “Our journey doesn’t end here – next up is our cornerstone investment into the British Growth Partnership, subject to regulatory approval, which will tap into the full commercial potential of world-class breakthrough technology companies based here in the UK.”
LTAFs allow defined contribution pension schemes to gain exposure to illiquid private market assets. Aegon is a signatory to the 2023 Mansion House Compact, under which large providers pledged to allocate 5% to private markets by 2030 and said its use of three LTAFs shows it is committed to the Mansion House Compact.
mallowstreet understands that providers have some way to go to fulfil their pledge. A one-year progress update by the Association of British Insurers in 2024 showed just £793m of unlisted equities was held in default funds, equating to 0.36% of a combined £219bn. The exception is master trust Nest, which started investing in private equity in 2022 with Schroders, aiming for a £1.5bn exposure by early 2025 and holding around 2% in each of its target date funds.
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