Schroders Capital's LTAF to Support Climate Goals

Schroders Capital has unveiled Schroders Capital Climate+ LTAF, a Long-Term Asset Fund (LTAF) that focuses on assisting UK pension fund investors in their efforts to achieve net-zero transition.

The specialised private markets investment division aims to aid investors in their support of the transition to net-zero carbon emissions.

Schroders' announcement of the Schroders Capital Climate+ LTAF follows the recent regulatory approval of the UK's first LTAF. The approval of an open-ended investment vehicle enables investors with longer-term horizons to efficiently invest in illiquid and private assets.

The UK master trust Cushon, which is at the forefront of integrating sustainability into its investment strategy, is the founding investor of the Schroders Capital Climate+ LTAF.

Schroders Capital Climate+ LTAF's primary impact goal is to invest in diversified multi-private assets that make a positive contribution to climate change and support the transition towards net-zero economies. The strategy targets investments in four long-term themes: climate mitigation, climate adaption, biodiversity/natural capital, and social vulnerabilities.

The fund will have a global investment mandate and will allocate capital to a range of asset classes, including infrastructure, real estate, private equity, natural capital, and biodiversity-focused assets. The investments will be made through a blend of Schroders Capital and externally-managed funds.

Schroders Capital will tap into the expertise of BlueOrchard, an impact investing pioneer acquired in 2019, to deliver a high-impact strategy that adheres to the Operating Principles for Impact Management (OPIM).

With $91 billion in assets under management, Schroders Capital provides investors with access to a wide range of private asset investment opportunities. The Schroders Capital Climate+ LTAF strategy may achieve exposure to underlying assets through segregated accounts, direct investments, secondary investments, and co-investments.

The strategy will feature a robust liquidity management framework that prioritises managing excess cash and investing in more liquid assets. The Schroders Group is already a leader in the market for offering structures that provide better access to private assets through its range of listed vehicles, semi-liquid, and illiquid structures.

According to Tim Horne, Head of UK Institutional Defined Contribution (DC) at Schroders, opportunities for UK DC savers to benefit from private asset returns have been traditionally limited. The Climate+ strategy will allow investors to reap the rewards of private asset diversification and performance, as well as contribute to the growing global momentum towards net-zero and green economies.

Horne added that the quick launch of the strategy after regulatory approval to launch the UK's first LTAF highlights Schroders' commitment to meeting the needs of investors in this area.

David Seex, Head of Private Asset Solutions at Schroders Capital, stated that climate change is a pressing concern and private assets can play a vital role in financing the Just Transition we need to make. He also highlighted that pension savers are seeking opportunities to participate in addressing this generational shift while generating sustainable returns in their retirement portfolios.

Seex added that Climate+ offers a single entry point to a diversified multi-private asset portfolio of investments that directly address the adaption to and mitigation of climate change. Schroders Capital is dedicated to innovating and making a positive impact, he said.

Julius Pursaill, Strategic Adviser at Cushon, expressed his enthusiasm for the new strategy and emphasised the critical role pensions can play in advancing the transition to a more sustainable economy and achieving net zero. Cushon is pleased to be partnering with Schroders as a founding investor. Pursaill highlighted research that indicates members are more invested in their pensions when investments align with their values, resulting in better outcomes in retirement.

He added that pensions can be a positive force for people and the planet, and the new strategy is a significant advancement for the industry.

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Source: Schroders Capital