Long-term asset funds (LTAFs) are now eligible for inclusion in Stocks & Shares ISAs, a regulatory change under the under UK Treasury reforms, effective 6 April.
Morningstar said Financial Conduct Authority-approved LTAFs account for around £7.3b in assets under management, up from £5b in June 2025, with a further £3.1b of committed but uncalled capital.
The market remains dominated by institutional investors, according to the data provider, with defined contribution pensions representing the majority of assets, while retail adoption remains limited.
There are currently around 25 LTAF strategies available in the UK, primarily focused on private multi-asset and private debt, alongside a smaller number of funds targeting private equity, infrastructure, venture capital and property.
UK DC schemes turn to LTAFs for private markets: Schroders
Most LTAFs have a global investment remit, although some strategies focus specifically on Europe or the UK. ISA eligibility from April could act as a catalyst for growth across wealth and retail channels, according to Morningstar, though platform readiness and operational complexity remain barriers.
Evangelia Gkeka, principal, manager research at Morningstar, said: “Allowing LTAFs into Stocks & Shares ISAs is an important signal of the direction of travel. It has the potential to broaden access to private assets, but it doesn’t remove the need for careful due diligence. These are complex, semiliquid products, and education – particularly around liquidity terms, fees, valuation and allocation processes and realistic risk-return expectations – will be critical if the retail channel is to scale responsibly.”
