Schroders launches first sustainable long term assets fund for UK pensions

Impact objective is to contribute positively to climate change and support the transition towards net zero

Schroders Capital, the fund house’s private markets investment division, has launched the first long term assets fund for UK pensions, having been granted approval by the Financial Conduct Authority (FCA) this month, with a focus on sustainable investing.

Schroders Capital Climate+ LTAF is a diversified multi-private assets fund, designed to help UK pension fund investors support the net-zero transition.

An LTAF is 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 pension master trust focused on integrating sustainability into its investment strategy, is the LTAF’s founding investor.

Schroders Capital Climate+’s core impact objective 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.

The fund, which has a global investment mandate, will allocate to infrastructure, real estate, private equity, natural capital and biodiversity-focused assets, through a mixture of Schroders Capital and externally-managed funds.

Pension opportunities

Schroders Capital will also leverage the experience of impact investment firm BlueOrchard, which it acquired in 2019, to deliver a high impact strategy, aligned to the Operating Principles for Impact Management (OPIM).  

Tim Horne, head of UK institutional defined contribution (DC) at Schroders, said opportunities for UK DC savers to benefit from the returns private assets can bring have “traditionally been very limited”. 

He added: “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.”

The speed at which the fund has launched, following approval earlier this month, is “testament to our focus on meeting the needs of investors in this space” he added.

David Seex, head of private asset solutions at Schroders Capital, said: “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.”