Investment Management Firms Achieve £5 Million Asset Under Management Following Expectations for ISA Reforms to Boost Expansion
The UK government's decision to include Approved Long-Term Asset Funds (LTAFs) in Stocks and Shares Individual Savings Accounts (ISAs) from April 6, 2026, is set to significantly increase the assets under management (AUM) of LTAFs. This move will open up long-term, private-market investments to a wider retail investor base within ISAs, which have traditionally not allowed such asset types[1][2][3].
As per data from Morningstar, the current AUM for approved LTAFs stands at approximately £5 million. However, the regulatory change allowing them in ISAs is predicted to drive substantial growth beyond this baseline, although precise forecast figures are not specified[3]. The government’s Financial Services Growth and Competitiveness Strategy, which includes this reform, aims to roll back over-regulation and unlock capital for UK businesses, supporting returns for savers and growth in private asset markets[1][4].
Industry experts, including Morningstar, predict continued growth in the LTAF market. The potential for diversification and access to higher returns makes LTAFs an attractive proposition for investors. LTAFs better enable access to long-term, illiquid private assets[6].
The LTAF market currently offers over 20 strategies, and it was opened to retail investors in 2023. Notably, asset management firm Future Growth Capital has launched two LTAFs, although no specific AUM or committed capital information was provided[7].
The market for LTAFs remains relatively immature, and growth will depend on factors such as industry readiness, Financial Conduct Authority (FCA) authorization processes, and investor demand[2]. Early movers among asset managers working on regulatory authorization and product readiness are expected to capitalize most effectively on this opportunity[2].
Related pension reforms designed to encourage investment in UK assets and consolidation in pension funds are also expected to indirectly impact the demand for private capital products such as LTAFs[2][5]. Overall, market experts expect the ISA inclusion to act as a catalyst for more retail capital flowing into LTAFs, with a likely multi-fold expansion of their AUM over the coming years starting from April 2026.
[1] HM Treasury. (2021). Financial Services Growth and Competitiveness Strategy. Retrieved from https://www.gov.uk/government/publications/financial-services-growth-and-competitiveness-strategy
[2] The Pensions Regulator. (2021). Pension Schemes Act 2021: Key provisions. Retrieved from https://www.thepensionsregulator.gov.uk/en/policy-and-guidance/pension-schemes-act-2021/key-provisions
[3] Morningstar. (2023). LTAF Market Update. Retrieved from https://www.morningstar.co.uk/uk/news/1539695/ltaf-market-update
[4] HM Treasury. (2021). Budget 2021: A plan for growth. Retrieved from https://www.gov.uk/government/publications/budget-2021-a-plan-for-growth/budget-2021-a-plan-for-growth
[5] The Pensions Regulator. (2021). The Pension Schemes Act 2021: What it means for pension schemes and savers. Retrieved from https://www.thepensionsregulator.gov.uk/en/news/the-pension-schemes-act-2021-what-it-means-for-pension-schemes-and-savers
[6] The Pensions Regulator. (2021). Long-term asset funds (LTAFs): A guide for trustees. Retrieved from https://www.thepensionsregulator.gov.uk/en/docs/long-term-asset-funds-ltafs-a-guide-for-trustees
[7] Future Growth Capital. (2023). Press Release: Future Growth Capital Launches Two LTAFs. Retrieved from https://www.futuregrowthcapital.com/news/future-growth-capital-launches-two-ltafs/
Investors might find the LTAF market appealing due to the potential for diversification and higher returns. With the inclusion of LTAFs in Stocks and Shares Individual Savings Accounts (ISAs) from April 6, 2026, it's anticipated that the growth of LTAFs will significantly increase, which could lead to a substantial rise in their assets under management (AUM).
