UK's LTAF extends operations into the timber sector

In a significant move for the pensions industry, Domain Timber Advisors, a subsidiary of the US alternative asset management firm Domain Capital Group, has joined forces with Fulcrum Asset Management's Long-Term Asset Fund (LTAF). This partnership provides the HSBC Pension Scheme with access to an evergreen investment structure offering exposure to US forestland.

The LTAF, a new fund structure in the UK, enables defined contribution funds to invest in long-term private market assets like infrastructure or private equity. These types of assets are traditionally underrepresented in DC portfolios due to regulatory restrictions. The LTAF with HSBC Pensions, part of Fulcrum's private market offering, includes private equity, value-add real estate, value-add infrastructure, natural resources, and private credit, with the timber allocation adding to this diverse portfolio.

Fulcrum's LTAF with HSBC Pensions is bespoke to HSBC, but a commingled version of the fund will be launched later this year, subject to regulatory approval. If approved, this commingled version will be open to other investors, expanding the opportunities for investment in long-term private market assets.

HSBC Pensions, which manages £28bn of Defined Benefit assets and a further £7bn of Defined Contribution assets, split across three separate sections, aims to improve expected member outcomes by targeting better risk-adjusted returns through diversifying the assets in which members' savings are invested.

Russell Picot, chair of the HSBC Bank (UK) Pension Scheme Trustee Board, commented on HSBC's investment in the LTAF in March, stating that this move is a step towards driving positive change within the pensions industry.

This partnership between Fulcrum Asset Management and Domain Timber Advisors marks an exciting development in the pensions industry, offering a unique opportunity for investors to gain exposure to US forestland and contribute to a more diversified and risk-adjusted portfolio.