UK's LTAF broadens its horizons to timber sector

In a strategic move aimed at diversifying its investment portfolio, HSBC Pension Scheme has partnered with Fulcrum Asset Management to gain access to Long-Term Asset Funds (LTAFs). These new fund structures in the UK allow defined contribution funds to invest in long-term private market assets like infrastructure or private equity, assets that are traditionally underrepresented in DC portfolios due to regulatory restrictions.

The collaboration offers HSBC access to a diversified asset base, with the aim of improving expected member outcomes by targeting better risk-adjusted returns. This partnership was announced by HSBC Pensions in March, and Fulcrum Asset Management's LTAF, a multi-asset private market fund, has since launched this spring with investments from HSBC Pension Scheme.

The initial LTAF is bespoke to HSBC, while a commingled version, set to launch later this year, subject to regulatory approval, will be open to other investors. The exact amount HSBC Pensions has committed to the initial LTAF was not disclosed.

The LTAF offers HSBC access to an evergreen investment structure, providing exposure to US forestland, in addition to its existing private market offering. Domain Timber Advisors, a subsidiary of the US alternative capital group Domain Capital Group, has been added as a new timber manager to the LTAF's range of illiquid specialists. The LTAF's recent timber allocation adds to its existing private market offering, which includes private equity, value-add real estate, value-add infrastructure, natural resources, and private credit.

Lisa Mehay, a seasoned timber manager, has been appointed as the new timber manager currently available to Fulcrum Asset Management's LTAF. Russell Picot, chair of the HSBC Bank (UK) Pension Scheme Trustee Board, commented on HSBC's investment in the LTAF in March: "Improving expected member outcomes by targeting better risk-adjusted returns through diversifying the assets in which members' savings are invested have been at the heart of the HSBC Scheme."

HSBC Pensions manages a total of £35bn (£28bn in Defined Benefit assets and £7bn in Defined Contribution assets) across three separate sections. The annual conference scheduled for October 24, 2024, hosted by our website, promises to be an exciting event for those interested in the evolving world of pension investments.