With long-term asset funds (LTAFs) set to become eligible for inclusion in UK stocks and shares ISAs from April 2026, private markets are about to become far more accessible to retail investors. But are LTAFs the right vehicle to deliver that exposure?
An LTAF is an investment vehicle through which an investor can gain exposure to long-term and illiquid assets, such as private equity, private debt, real estate and infrastructure. More than 50% of the fund must be in unlisted securities or other long-term assets.
They were first introduced in 2020 by then-chancellor Rishi Sunak, effectively as a means of corralling pension fund money into start-ups and infrastructure projects to drive economic growth.
Fast forward to July 2025 and now-chancellor Rachel Reeves unveiled the ‘Leeds Reforms’, which included an announcement that LTAFs can be held in stocks and shares ISAs from April 2026.
But are they the best way for investors to access private markets? Trustnet spoke to industry to assess the pros and cons.
The pros
For investors, accessing private assets has historically been more difficult for a variety of reasons, including limited liquidity, high minimum investment requirements, extensive due diligence requirements and regulatory considerations.
According to George Bauer, head of investor product for global platform solutions at Fidelity International, the introduction of LTAFs into stocks and shares ISAs “helps to address some of these challenges”.
In addition, he said the main advantage of private assets that can be accessed through LTAFs is the diversification they can offer.
“Private assets are valued less frequently than public markets, offering greater stability and access to a wider investment universe, particularly within earlier stage companies that offer significant growth potential,” Bauer explained.
“Private markets have historically offered strong performance, especially in innovative sectors like technology, infrastructure and healthcare. By pooling investments and using professional fund managers, LTAFs can give investors access to these opportunities without needing to navigate the complexities themselves.”
For example, assets like renewable energy infrastructure will behave differently to shares impacted by the ups and downs of the stock market and therefore could help to balance an investor’s portfolio.
Laith Khalaf, head of investment analysis at AJ Bell, agreed, noting that the ability of LTAFs to provide investors with exposure to specialist illiquid assets “may be worth considering for very experienced investors with well-diversified portfolios”.
The cons
However, given the complexity of an LTAF, additional risk warnings and investor suitability protections do apply.
One of the most notable caveats is their limited liquidity.
Unlike traditional funds, which an investor can buy and sell on a daily basis, LTAFs usually offer quarterly dealing windows, meaning that the investor must give notice before withdrawing their money and they may have to wait a minimum of three months to access it.
These long notice periods for redemptions will probably be “off-putting for most”, said Khalaf.
“Especially when retail investors have access to [other vehicles like] investment trusts which offer exposure to illiquid assets and can be bought and sold on the market throughout the trading day,” he added.
By limiting trading frequency, the broad aim of an LTAF is to promote a long investment horizon and to try and manage the risk of fund suspensions better.
However, there are other more liquid vehicles through which investors can access private markets, such as the aforementioned venture capital trusts and private equity-focused investment trusts.
Last month, the Association of Investment Companies (AIC) reported that the two best-performing collective investment vehicles in the UK over July – delivering returns of 31% and 19% respectively over one month – were Apax Global Alpha and Symphony International Holdings. These can both be found in the private equity sector of the investment trust market.
Khalaf said venture capital trusts can offer “generous tax breaks”. However, there is a five-year lock-in period to retain the 30% upfront tax relief, meaning investors must remain invested for five years or more.
In addition, the cost of an investment trust’s liquidity is that the price an investor sells at could be less than the net asset value (NAV). “But, then again, so may the price you buy in at,” he said.
“The price deviation from NAV inherent in the closed-ended model does introduce an extra element of risk and volatility, but one suspects most investors would prefer that to waiting for months to access their money when the time comes to sell.”
Other options include Sicavs – European open-ended collective investment funds – as these invest in the same types of assets as UK LTAFs but are also available for pan-European distribution.
Given these risks, investment platforms such as Hargreaves Lansdown have suggested that LTAFs should only form a small part of an investor’s portfolio – no more than 10%.
The platform recently partnered with Schroders to offer LTAFs.
Schroders director of private markets James Lowe has said: “Investment trusts continue to represent an excellent vehicle for retail investors with low tolerance to illiquidity.
“However, ongoing growth, innovation, and development in the private market industry is changing things and providing UK private investors with greater choice as to how they gain exposure to private markets.”
Reviewing their options
Current access to LTAFs is limited, with ISA providers exploring their options, given the fact most major investment platforms are set up to accommodate daily dealing funds, rather than those that are more long term and illiquid.
A spokesperson for interactive investor said: “We await further updates on plans for these fund structures to become more available to retail investors, but in the meantime, we would emphasise that education will be a significant part of this, as retail investors will need to have a clear understanding of both the risks and opportunities of the private assets.”
Meanwhile, Bauer said that Fidelity International is currently “exploring” whether LTAFs could be offered through its personal investing platform.
“We believe there is a compelling investment case for offering retail consumers greater access to private assets,” he said.
“For investors with a longer-term investment horizon, similar to pension scheme members, there are opportunities for enhanced returns and portfolio diversification through sectors not available in public markets.”
However, Bauer said “there are further regulatory and operational considerations to work through, in terms of platform dealing capabilities and ensuring adequate consumer protection and education”.
Along a similar vein, Emma Wall, chief investment strategist at Hargreaves Lansdown, said the investment platform sees LTAFs as a “welcome addition” to the breadth of investment options available.
“We see LTAFs as complementary to private market investment trusts, offering diversity to our clients,” she said.