Fidelity International to Incorporate Private Assets into Investment Strategy for UK Pensions
Fidelity International has announced its intention to integrate private assets into its £16.9 billion default investment strategy, FutureWise, tailored for workplace pension schemes in the UK. This investment strategy will be enhanced through the introduction of Fidelity’s inaugural Long-Term Asset Fund (LTAF), which gained regulatory approval from the Financial Conduct Authority in August.
Diverse Access to Private Asset Classes
The Fidelity Diversified Private Assets LTAF aims to offer members robust diversification opportunities across various private asset classes with a single, specialized implementation approach. This fund is designed to provide globally diversified exposure to private markets, encompassing areas such as private equity, private credit, infrastructure, real estate, and natural resources. Fidelity’s esteemed investment team will select top General Partners (GPs) across these categories, ensuring high-quality management. Additionally, the fund will maintain exposure to public assets to support liquidity needs.
FutureWise to Lead the Charge on LTAF Integration
As the first investor in Fidelity’s Diversified Private Assets LTAF, FutureWise will begin the integration process in 2025, coinciding with the launch of the fund. The strategy includes a phased approach to gradually increase allocation to the LTAF, aiming for a target investment of 15% during the growth phase over the next three years.
A Commitment to Member Outcomes
Stuart Warner, Global Head of Platform Solutions at Fidelity International, emphasized: “We are a major pension provider in the UK, supporting over 700,000 defined contribution members. Incorporating private assets into our default strategy represents a meaningful step forward for members focused on their retirement savings. Addressing the pensions adequacy gap is crucial to mitigating impending retirement challenges over the decades ahead. We strongly believe that aligning private market investments with our members’ long-term objectives creates a robust opportunity for them.”
Supporting Productive Capital in the Pension Landscape
Warner also expressed Fidelity’s support for initiatives aimed at unlocking ‘productive capital’ from defined contribution schemes. The ongoing government review of the pensions sector, which emphasizes values and outcomes, aligns with the objectives of the LTAF, directing long-term pension resources back into the real economy.
Enhancing Investment Opportunities
Dan Smith, Head of Workplace Investing at Fidelity International, noted: “Our dedication lies in securing the best outcomes for pension scheme members. By diversifying investments to include both public and private markets, we aim to create resilient investment opportunities. The integration of our LTAF into the FutureWise strategy will broaden the asset range available to members, potentially improving risk-adjusted returns and ensuring better long-term outcomes, all within a structured governance framework.”
Evolution of FutureWise Strategy
Smith highlighted that the transition of FutureWise from a Lifestyle to a Target Date Fund model has already spurred significant growth and enhanced member results. The incorporation of private assets stands as a pivotal next step in the evolving strategy for FutureWise, demonstrating Fidelity’s commitment to adapting to the changing needs of its members.
