The Private Intermittent Securities and Capital Exchange System (PISCES) was proposed by chancellor Rachel Reeves during her Mansion House speech last month.

Under the proposals, the new platform would be developed using a ‘financial markets infrastructure sandbox’, which allows the regulator to test the design before finalising the permanent structure.

The Treasury is aiming to bring a statutory instrument before parliament by May 2025, which will provide the legal framework for the PISCES Sandbox.

The FCA said it expects to publish its final rules shortly after. The regulator is consulting on risk warnings for investors around PISCES.

See also: UK unemployment rates remains unchanged at 4.3%

Simon Walls, interim executive director of markets at the FCA, said: “Next year we will ring the bell on a new private stock market that could transform how private companies access funds and grow. It will offer investors more access and a greater confidence to invest in private companies and could act as a stepping stone to public markets for those firms. 

“We want to work with industry and ensure we have the right building blocks in place to support investment in growing companies.” 

Firms wishing to run a PISCES platform will have to apply to the regulator, and once approved will be able to run intermittent trading events.

Further information will be published in early 2025 for firms interested in running a PISCES platform. 

Tulip Siddiq, economic secretary to the Treasury, added: “PISCES will be an innovative new type of stock market for trading for private company shares and is a significant step forward in our reforms to capital markets. It will give investors the chance to get in on the ground floor of some of the most exciting companies and support the growth of those businesses.

“Today’s consultation marks a significant step towards delivery of the new market next year and sits alongside our wider programme of reforms to boost competitiveness and investment. That includes the FCA’s overhaul of the UK listing rules and the creation of pension megafunds which will unlock billions of pounds of potential investment in businesses.”

Which particular asset classes and strategies do you anticipate your intermediary clients focusing on in 2025?

At HSBC Asset Management (HSBC AM), we have a multi-strategy approach to managing solutions for intermediary clients in the UK. We have seen strong interest from UK Discretionary Fund Management clients for our ETF and Index range in Model Portfolio Service portfolios as investors are increasingly looking for more flexibility and choice. This is a growth trend continuing into 2025 and have recently launched the HSBC S&P 500 Equal Weight Equity Index fund for this client segment. 

In addition to passives, we’ve also seen growing interest and flows into active management, especially in asset classes such as Healthcare, India Equity and Fixed Income, Global Infrastructure and Global Equities. We have also transitioned our existing Global Property fund into a Global Listed Real Asset strategy solution for the UK market reflecting client demand which is another area of growth for 2025 in our view. Our multi-asset platform continues to remain a core part of our offering for clients in the UK wholesale segment, with more intermediaries outsourcing investment capabilities to model portfolio services providers it demonstrates that multi-asset is set to remain a core component of the market. We now manage over $157bn for clients globally in Multi Asset solutions and are seeing continued support from UK intermediaries within the HSBC World Selection and Global Strategy ranges.

See also: Track to the Future – with William Blair’s Tom Ross

Should end-investors – and, by association, asset managers – be thinking beyond equity and bond investments? Towards what?

Clients are already investing beyond pure equity and fixed income products and we have seen increasing interest in our World Selection multi-asset range. This range has exposure to a global infrastructure strategy run by our alternatives business which demonstrates how private markets are set to become increasingly important for end-investors and asset managers going forward. In time we’d like to see greater semi and illiquid strategies playing a broader diversification role within asset allocation models for end investor’s portfolios. However, challenges remain in supporting access to the space among intermediaries such as client suitability and operational factors, as well as UK fund platforms not currently being able to hold such investment strategies.  

In addition, research from the Investment Association (IA) has highlighted the importance of considering a wider range of asset classes in the current market environment. Monthly data published by the IA has revealed a wide array of best-selling asset classes among retail investors over the past year, ranging from government bonds to money market funds and global equities. This highly diversified support for a range of different investments is a trend that we expect to see continue into 2025.

To what extent do private assets and markets fit into your thinking? What are the currents pros and cons for investors?

HSBC AM’s alternatives business is a core area of growth for the UK, and we currently manage $71bn across diversified capabilities such as hedges funds, private markets, real estate, direct lending, infrastructure debt, listed infrastructure, energy transition and venture capital. 

One of the primary challenges for individual investors regarding private markets currently is the difficulty that many have in accessing the space outside of a multi asset strategy, rooted partly in the operational plumbing underpinning the UK IFA market such as UK fund platforms that still currently require daily liquidity. It is also important to consider the complexity of these assets from a client suitability perspective, which potentially leaves room for more work to make them suitable for UK retail investors, as well as regulatory factors which would need to be addressed to support wider access. That said, the development of Long-Term Asset Funds is aiming in the right direction. Broadly, however, we see the move towards private markets as the direction of travel for the industry and expect that it is only a matter of time.

Given client and regulatory pressure on charges, how is your business delivering value for money to intermediaries and end-clients?

We continue to see strong support among intermediaries and end-clients for our Global Strategy Portfolios. This is a globally diversified multi-asset solution offering an active allocation proposition with a passive fulfilment. It is one of our key propositions for the UK intermediary market and has offered great value for investors, consistently delivering strong returns and performing well against Assessment of Value measures while maintaining a focus on cost.

See also: Track to the Future – with Fidante’s Adam Brown

How much of your distribution is currently oriented towards climate change, net zero, biodiversity and other segments of sustainable investing? How do you see this approach to investing evolving?

Sustainable investing continues to represent a key element of our strategy at HSBC Asset Management. We manage over $70bn in ESG and sustainable strategies as of the end of last year and launched ten new ESG strategies globally throughout 2023.  One area which bears a lot of meaning for me is how we, as an industry, tackle social inequality. HSBC Asset Management gave me the opportunity of launching the social mobility programme a couple of years ago, and while all areas are important such as climate change and biodiversity, we do feel social inequality needs greater exposure.

How are you now balancing face-to-face and virtual distribution? In a similar vein, how are you balancing working from home and in the office?

The intermediary sector is an incredibly resilient part of the financial services industry that provide a significant level of financial advice for retail investors. Speaking with many advisers through and following the pandemic, a high percentage returned to operational normality rather quickly i.e. moving back to being in the office five days a week before other parts of the industry.  I find that it can be easy to gauge the health of the intermediary market by the number of industry events companies approaching us to participate at conferences, which has gone through the roof again in 2024! There’s a new proposal landing on my desk every week.

Personally, I am usually in the office around three to four days a week but it does depend on when I am seeing clients across Northern Europe, as well as the UK, so it can vary from week to week. While it’s important to meet with clients or colleagues in person, we do need a healthy balance of virtual engagement, with the most important factor being that we engage with our clients in a way that they prefer.  Call me old fashioned but I do still like putting on a suit and going into the office.

What do you do outside of work?

Like most parents my kids occupy most of my time one way or another. I’ve had the pleasure of being a 5am poolside swimming parent with my daughter through to spending most of my weekends away with my son who’s competed in motorsport championships across the UAE, Europe and more recently the UK.  One of my own activities which allows me headspace is walking my dogs.

See also: Track to the Future – with Federated Hermes’ Clive Selman

What is the most extraordinary thing you have seen in your life?

Seeing my two children come into the world holds the top spot but that’s an obvious statement! But in my previous life I think I must have been a structural engineer. I joined HSBC Asset Management in 2005 in a global role and remember watching the start of the site excavation for the Burj Khalifa in Dubai. In 2007 I had the pleasure of moving to Dubai with HSBC AM and witnessed the construction of the building which was one of the most amazing things I’ve seen. Even seeing the building in recent times brings a smile to my face. 

Looking a little further ahead, in what ways do you see the asset management sector evolving over the next few years?

As mentioned earlier, we anticipate private markets will likely play a key role in the evolution of the asset management sector in the years ahead. We are committed to this part of the market. So far, the growth has been more institutional, with pension and insurance funds moving into the market, but there is certainly a growing interest among intermediaries who want to develop a stronger understanding of how their clients can access the space.   

The Aviva Investors Multi-Sector Private Debt LTAF will invest across the private debt spectrum, including real estate debt, infrastructure debt, structured finance and private corporate debt.

The strategy has received £750m of initial investment from Aviva’s My Future Focus default pensions solution, which invests in a broad range of asset classes on behalf of the firm’s range of auto-enrolment Defined Contribution default strategies.

See also: Analysis: Is the end of the magnificent seven nigh?

It adds to Aviva’s existing Real Estate Active LTAF, which launched in May 2023, and the conversion of its Climate Transition Real Asset fund to sit under the new regime in March.

Daniel McHugh, CIO at Aviva Investors, said: “We are pleased to add a dedicated private debt solution to our suite of Long Term Asset Funds, further positioning Aviva Investors as the largest provider of LTAFs for the UK DC and Wealth market.

“Private debt is a key growth area for us, and we believe our multi-sector approach will best-capture relative value through the market cycle.

“This should give it potential to deliver strong risk-adjusted returns and diversification to pension schemes, whilst also meeting their liquidity needs.”

On Monday (25 November), the Apax XI fund – a global buy-out fund which AGA is a limited partner of – reached an agreement to acquire the business. The purchase, which remains subject to “customary closing conditions”, will see the company subsidiary become a standalone UK accountancy business rebranded as S&W.

See also: Apax Global Alpha to invest £24.4m as part of Veriforce acquisition

According to the announcement, Apax sees the mid-market accountancy and advisory space as “the ideal place to invest as increased regulation and conflicts make the Big Four less competitive in servicing the mid-market”.

“Within this market, Apax viewed S&W as the ideal UK platform to back because of its brand heritage, high quality service offering, deep talent pool and it has demonstrated a track record of growth,” the firm said.

Apax added it aims to “support the newly-branded S&W on its growth journey”, hoping to “cement its place as a leader in the mid-market space”.

“There is an opportunity to improve its already strong client offering through new go to market strategies, cross-selling and further investment in technology,” it continued. “There is also a meaningful opportunity to unlock strategic M&A in what is a fragmented market.”

In today’s economic climate, where inflation rates remain stubbornly above central bankers’ targets, protecting clients’ capital within the new inflationary regime has become the number one focus for UK wealth managers.

Traditional and reliable assets such as cash and bonds are struggling to deliver inflation-beating returns, meaning wealth managers need to be looking for more diversified investments. Private capital, however, offers a compelling alternative.

Asset classes like private credit, infrastructure, and farmland, private capital brings income potential, diversification and stability, making it an intriguing option for wealth managers looking to build portfolios that can weather inflation and stay on track with long-term goals.

See also: Private markets: Wealth managers face high barriers to entry

The UK has been experiencing high rates of inflation, and for wealth managers—many of whom focus on retirement income and preserving purchasing power—finding assets that keep pace with this shift is crucial.

Traditional assets offered more reliable income generation and capital preservation in the past, but private capital now stands out as a dynamic choice, providing inflation resilience through less traditional routes. Because of their inherent long-term investment horizon and relative insulation from short-term market fluctuations, private markets can offer enhanced, risk-adjusted returns.

But where should wealth managers be looking within private and how should wealth managers be allocating to the asset class?

Key asset classes for inflation protection

Private credit, infrastructure, and farmland can all play a role in building inflation resilience. Private credit, for example, often features floating-rate loans that can adjust to rising interest rates, maintaining income levels even as inflation rises. This type of credit serves niches overlooked by traditional lenders, allowing wealth managers to create tailored income streams with added inflation protection.

Infrastructure investments, particularly in sectors like renewable energy, telecommunications, and transport provide steady demand and contractual income streams, many of which have inflation-linked adjustments built in. As infrastructure adapts to support trends like decarbonisation and digital expansion, investment opportunities in this sector continue to grow.

See also: Bain & Company: Private markets to make up 30% of AUM by 2032

Farmland also benefits directly from rising food prices and the increasing scarcity of land, offering both capital appreciation and steady income that keeps pace with inflation. By including farmland, wealth managers can further diversify portfolios and achieve long-term income goals, all while leaning on a sector that remains consistently in demand.

Debunking myths and structuring portfolio

Some clients may hesitate around private capital, believing it to be illiquid, opaque and volatile. While private assets don’t offer the liquidity of public markets, they bring a different form of security through structured cash flows and consistent income potential. A well-designed portfolio can balance these illiquid assets with more liquid ones, meeting short-term needs while benefiting from the inflation protection private assets can provide.

Adding private capital effectively means thinking about the client’s whole portfolio and strategically reducing low-yield bonds or cash holdings in favour of assets with real growth potential. A carefully balanced mix of private credit, infrastructure, and farmland can allow wealth managers to build portfolios that don’t just survive inflation, but potentially thrive in it.

While once considered a niche add-on, private capital has become a more central player in building resilient portfolios. For wealth managers, adding private capital can open up new avenues for income, stability, and inflation protection. In a world where traditional investments struggle to keep pace with rising costs, private capital offers a flexible and enduring way to meet client needs in an ever-evolving economic landscape.

The fund, named the WS Fulcrum Diversified Private Markets LTAF, will be the second LTAF launched by Fulcrum. It will be offered with a flat-fee structure, and plans to launch 29 November with Waystone as authorised corporate director.

The solution will hold a mix of real estate, infrastructure, natural resources, alternative credit and private equity in an open-ended OEIC structure. Investments will be selected by Fulcrum’s ‘Panel of Illiquid Specialists’, a group of managers sourcing illiquid investment opportunities.

See also: Carne: 82% of UK asset managers considering LTAF launch

Matthew Roberts, head of Fulcrum alternative solutions, said: “We are thrilled to be bringing our LTAF to the broader professional investor marketplace. We’ve taken time to ensure that we are offering investors a carefully designed entry point to private markets.

“Ever since we started the Fulcrum alternative solutions team, our goal has been to solve the challenges that investors have faced when it comes to accessing alternatives and this fund launch represents a significant milestone in that journey.”

Within the UK market specifically, 82% are considering an LTAF launch, while 28% are considering its EU counterpart, the ELTIF. Among US managers, 74% have interest in an LTAF compared to 42% for ELTIFs.

The LTAF and ELTIF structures allow additional flexibility when investing in traditionally illiquid products, such as private markets, which can broaden appeal of the product to those who may need access to funds before the traditional investment period is realised. This can include requiring a certain percentage of liquid assets within the vehicle as well as set exit periods.

See also: Future Growth Capital to boost UK private markets with new LTAFs

While private markets have been an area of interest among pension scheme investors, the creation of the ELTIF vehicle in Europe and the LTAF in the UK has also opened the opportunity to private investors. Now, 88% of UK and European wealth managers expect the investment level in private markets to grow over the next three years, with over a quarter believing growth will be “dramatic”.

Jeremy Soutter, managing director at Carne Group, said: “In the UK alone, DC assets are set to reach £1trn by 2030, with UK schemes looking to increase their allocation to private markets meaningfully in the next few years. This represents a huge market opportunity for the asset managers that can help fulfil this allocation.

“For wealth managers and DC pensions schemes, the LTAF and ELTIF serve as critical routes into illiquid asset classes and will catalyse the growth of private markets. Launching LTAFs or ELTIFs in a time-efficient manner will be critical for asset managers looking to capitalise on the private market opportunity.”

See also: Private markets: Wealth managers face high barriers to entry

Despite the faith in the market from wealth managers, as well as the interest in increasing product from asset managers, under a quarter of wealth managers currently access private markets through an LTAF or ELTIF. One of the limitations of the market is regulation, as managers come to terms with the compliance of the vehicles. Most managers expect to increase spending by 25% to 50% for regulation resources.

“Equally, some asset managers may need to assess if an LTAF or ELTIF is indeed necessary. With a number of DC master trusts now having, or planning to have, their own LTAF in place, asset managers may find they’re able to be appointed as sub-advisers within a schemes’ LTAF umbrella structure,” Soutter said.

“Launching an LTAF can be a complicated, lengthy and costly process – made all the more difficult by the competitive pressure to get to market quickly, a challenging commercial backdrop in which cost-effectiveness is key, and an increasingly complex regulatory agenda both in the UK and EU. Carne is therefore witnessing a significant number of asset managers turn to third party specialists to steer LTAFs through the regulatory process and enable speed to market.”

Which particular asset classes and strategies do you anticipate your intermediary clients focusing on in 2025?

I expect we will continue to see a focus on long-only equities, global equities (including emerging markets equities), and various flavours of US. equities. While there has been a strong focus on US large-cap equities, we may see more interest in small- and mid-cap US equities (perhaps leaning towards the smaller end of the capitalisation spectrum). I also expect emerging markets debt to become more prevalent as the US Federal Reserve cuts interest rates and the desire for longer-duration assets increases.

Should end-investors – and, by association, asset managers – be thinking beyond equity and bond investments? Towards what?

Yes, I think they should. Asset managers have to understand their capabilities and where they can add value for end investors. A firm such as William Blair, for example, should not try to do everything in private markets. At the same time, I do think individual investors should be thinking about private markets. Most of the global economy is in private markets, so it would be unfortunate to ignore it.

See also: Track to the Future – with Fidante’s Adam Brown

To what extent do private assets and markets fit into your thinking? What are the currents pros and cons for investors?

Private markets are for those who have longer investment horizons and an appropriate fee budget to ensure that they’re not investing in products that don’t actually provide the hoped for risk-adjusted returns. Illiquidity can be a challenge for individual investors with shorter time horizons.

Given client and regulatory pressure on charges, how is your business delivering value for money to intermediaries and end-clients?

I think the question is not one of absolute price but of price relative to the alpha being generated. That is what we focus on. We recently reviewed all our commingled vehicles and made some changes to pricing, reducing management fees and lowering caps on expenses. I would argue that these changes have been driven more by the increased competition, particularly from passive solutions, than an erosion of the alpha potential.

How much of your distribution is currently oriented towards climate change, net zero, biodiversity and other segments of sustainable investing? How do you see this approach to investing evolving?

ESG integration is an important part of our investment processes. William Blair is a quality growth manager, and for that reason, our investment philosophies naturally tend to lead us away from some of the industries that have the largest carbon footprints. We have also developed sustainability-focused global and US equity portfolios. These portfolios invest in those companies we determine to be best-in-class from an ESG point of view and companies that we believe will enable the energy transition, biodiversity, etcetera. We also allocate a small part of the portfolio to what we describe as “improvers,” companies that are not necessarily best-in-class but are addressing their weaknesses and potentially offering the chance of a re-rating.

See also: Track to the Future – with Federated Hermes’ Clive Selman

How are you now balancing face-to-face and virtual distribution? In a similar vein, how are you balancing working from home and in the office?

We are in the office three days a week to encourage collaboration and mentoring while benefiting from the productivity gains that colleagues experience working from home. We’re doing the same thing with our clients. More meetings are virtual, which is extremely time-efficient from a travel point of view but doesn’t allow you to build strong relationships. We also try to have some of our meetings with clients in person, where it’s easier to have broader conversations. I think we’ve found quite a good balance.

What do you do outside of work?

I spend time with my family. I’m a Francophile, so I enjoy spending time in France, eating good French food, and drinking good French wines. I’m a keen photographer, and I play tennis, ski, and jog occasionally.

What is the most extraordinary thing you have seen in your life?

On a safari in Tanzania, I saw a female cheetah teaching her two young cubs to hunt an antelope and bring it down. We weren’t in a car; we were standing a few hundred metres away. There was clearly education taking place, and it was quite spectacular.

Looking a little further ahead, in what ways do you see the asset management sector evolving over the next few years?

I think we will see continued consolidation of asset managers, pressure on pricing with the growth of passive, and increasing interest in private markets (not only institutionally, but also within the wholesale channel).

See also: Track to the Future – with BlackRock’s Heather Christie

The vehicles invest in long-term, illiquid assets such as private equity and infrastructure, and until earlier this year, were only accessible to institutional investors.

They became more widely available in July as part of the former chancellor’s Mansion House Compact as a means for pension funds to invest an additional £75bn into UK growth assets they previously struggled to access. Future Growth Capital was set up in response to that.

See also: Schroders rolls out alternatives fund to MPS clients

Its newly approved Schroders Future Growth Capital UK Private Assets LTAF will put money into underinvested UK private assets and venture capital businesses. In doing so, it hopes “to promote the UK’s private markets ecosystem, further enhancing the UK as an attractive destination for international investors,” according to Schroders.

Paul Forshaw, chief executive at Future Growth Capital, said: “This is a significant step forward for our new business and for UK pension capital. It will be the first LTAF entirely aligned with the Mansion House Compact, connecting long-term savings directly to the most attractive private UK companies, supporting these exciting businesses to grow and stay in the UK.”

This new fund will be launched in conjuncture with a global version that follows the same strategy called the Schroders Future Growth Capital Global Private Assets LTAF.

See also: Schroders receives approval for LTAF aimed at UK wealth market

Together, both strategies will invest an initial £1bn into their respective markets, which could increase by between £10-20bn over the next decade.

Forshaw  added: “The Schroders Future Growth Capital Global Private Assets LTAF will provide long-term savers with the benefits of further diversification across the spectrum of international private assets. Importantly, both LTAFs have the potential to deliver better long-term retirement performance.”

These new funds will be the fourth and fifth LTAFs to be launched by Schroders this year, which has been ahead of its peers in releasing these new products to pension clients.

Which particular asset classes and strategies do you anticipate your intermediary clients focusing on in 2024?

In 2024, we anticipate our intermediary clients will focus on a range of asset classes and strategies that offer diversification, stability, and sustainability. Asset-backed securities are likely to be of significant interest, providing more stable returns and diversification benefits amidst uncertain market conditions. Additionally, private markets with strong sustainable angles will also be appealing. For example, two of our affiliate managers include Proterra Asia, a private equity firm that focuses exclusively on investing in the Asian food sector, and Resonance Asset Management, an infrastructure focused private markets investor, investing in sustainable infrastructure and energy transition businesses that are enabling the energy transition through resource recovery and renewable energy generation and management.

Should end-investors – and, by association, asset managers – be thinking beyond equity and bond investments? Towards what?

End-investors and asset managers should certainly be thinking beyond traditional equity and bond investments as we approach the back end of 2024. The heightened geopolitical risks, especially around food and energy security, mean that those associated sectors will continue to undergo significant innovation, offering both opportunities and risks. Private markets, in particular, are at the forefront of bringing these developments to the market.

See also: Track to the Future – with Federated Hermes’ Clive Selman

The rise in securitisation also provides opportunities, particularly for institutional investors. The rehabilitation of the asset class post-GFC is being driven by institutional investors because securitized credit can offer higher returns than traditional fixed income, with similar credit charges. The asset class can also provide liquidity, which can be useful in times of need. Securitized credit can help diversify collateral pools and also offer flexibility to move across credit opportunities and capitalize on its floating rate nature.  We anticipate this will filter down to intermediary clients soon. Securitized products are experiencing growing demand, making them an increasingly positive option for investors looking for alternatives beyond equities and bonds. We believe it is a materially under owned asset class.

To what extent do private assets and markets fit into your thinking? What are the currents pros and cons for investors?

Fidante, as a multi-affiliate manager, partners with investment managers across both public and private market investment strategies.

With rising interest rates and higher correlations between traditional asset classes, private assets and markets can bring immense diversification benefits into investment strategies, which can act as shock absorbers in a diversified portfolio. Private markets also offer an illiquidity premium, providing the potential for enhanced returns for investors willing to lock up their capital for a certain period. As a business, we are particularly focussed on working with some of the early movers in the LTAF space to help provide specialist manager capabilities to the broader market.

Given client and regulatory pressure on charges, how is your business delivering value for money to intermediaries and end-clients?

Our business delivers value for money by focusing on bringing specialist managers to the market, rather than commoditising products. This approach allows us to offer diversification and unique investment opportunities, ensuring that clients get real value without compromising on quality. While we are not engaged in a race to the bottom on fees, our charges remain competitive compared to peers because of the distinctive expertise and performance our managers bring. This gives us some pricing power, as clients recognize the value we offer.

How much of your distribution is currently oriented towards climate change, net zero, biodiversity and other segments of sustainable investing? How do you see this approach to investing evolving?

Our objective as a business is not to suddenly become a multi-affiliate model only focused on ESG or impact managers, even though many of our affiliate partner managers have the credentials to be labelled as such. However, that’s ultimately because of the investment imperative, not because we’re distribution led.

See also: Track to the Future – with BlackRock’s Heather Christie

For example, one of our affiliates, Resonance, does not position themselves as an ESG manager, yet they were one of the first backers of onshore wind back in 2010. Fidante’s entire focus is to develop a platform across public and private markets, across asset classes, that’s diversified and populated with managers that have an identifiable edge, whatever that may be.

How are you now balancing face-to-face and virtual distribution? In a similar vein, how are you balancing working from home and in the office?

The transition to a more hybrid model of working has suited us well. As an Australian-based business, it softened one of our greatest challenges: distribution to areas outside of Australia where many of our managers still reside. In that way, it has levelled the playing field, allowing us to improve efficiency for both our affiliate managers and clients through arranging virtual conversations in the early stages of investment discussions.

What do you do outside of work?

As a new dad, the answer to this question has changed a lot in the last year. I did like to get stuck into endurance style events, but that’s been put firmly on the backburner whilst I focus on trying to get a baseline level of sleep! I remain a loyal Saracens supporter, although I haven’t laced up my boots in well over a decade. Skiing is probably when I’m at my happiest.

What is the most extraordinary thing you’ve seen in your life?

Being charged by an African Bull elephant in Kruger National Park is up there, a sharp contrast to a typical day in the city. The Ford KA I was in at the time didn’t provide an illusion of safety and I burnt the clutch as I hastened my getaway! For such a big animal they can really shift!!

Looking a little further ahead, in what ways do you see the asset management sector evolving over the next few years?

Recently, we launched a report assessing European institutional investor attitudes to allocating to specialist managers. Almost two-thirds of surveyed investors believed that the asset management sector is lacking specialist investment managers, while also perceiving those strategies to be higher risk. At the same time, the trillion-dollar club is growing, presenting a challenge to the squeezed middle, with increasing costs and reduced fees.

See also: Track to the Future – with Sarasin & Partners’ Christopher Cade

Because of this, as well as what our report showed, we see the multi-affiliate model becoming more favoured for its potential to reduce compliance and regulatory risks, mitigate ESG and greenwashing risk and allow managers to concentrate on making informed investment decisions. Indeed, in our survey, 83% of respondents indicated they would be more likely to invest in a specialist manager who is supported by a multi-affiliate investment management partner. This model will facilitate new market entrants over the next few years, thereby maintaining quality and competition in investment strategies.

In a stock exchange announcement this morning (9 October), CVC Advisers announced the consortium had received approval for the acquisition from the Swiss Competition Commission.

The private equity consortium is made up of CVC Advisers Limited, Nordic Capital, and Platinum Ivy, a subsidiary of Abu Dhabi Investment Authority, under the newly-formed bidding company Harp Bidco.

The deal is set to be implemented by a court-sanctioned scheme of arrangement.

The investment platform’s board has recommended that shareholders vote in favour of the acquisition, with the deal expected to close in the first quarter of 2025.

See also: Investment companies will no longer be required to produce KIDs

Investors are missing a beat by overlooking the top-returning asset class, according to Global Managed Portfolio Trust manager Peter Hewitt. “When you speak to people about private equity trusts their eyes begin to glaze over,” he says. “They’re not as easy to sell as equity trusts, but I think that’s a missed opportunity.”

Private equity trusts are not as easy to understand as those investing in listed stocks, but investors need only look at the asset class’s returns to see the appeal. Some of the biggest names in the sector such as 3i Group, HG Capital and Oakley Capital are up a colossal 1,069.7%, 573.8% and 272.3%, respectively, during the past 10 years, outperforming not only the majority of trusts, but most open-ended funds, too.

And this outperformance is only expected to continue. Research from the Amundi Investment Institute forecasts private equity to deliver annualised returns of 8.2% over the next decade – the highest of any other asset class.

Fee-fi-fo-fum

So why have retail investors ignored these portfolio boosters? High fees may be the answer. The average private equity trust charges investors an ongoing fee of 1.8%, which is much higher than those investing in equities – especially passive vehicles. While this is less than ideal, Hewitt says their considerably higher returns make the loftier charges worthwhile.

“They do charge very high fees, but at the same time it’s much more costly to run a private equity trust than it is to run one that invests in listed equities – and their track records are phenomenal. You just need to look at the likes of Pantheon, HG Capital and Oakley, and they’re some of the best performers in the investment company sector. In fact, they’re some of the best performers on the London stockmarket, full stop,” he says.

Annabel Brodie-Smith, communications director of the Association of Investment Companies (AIC), points out that private equity trusts require much more specialist knowledge and thorough research compared with listed equity portfolios due to the opaque nature of the asset class.

However, these already-high fees are made to look worse by misleading cost disclosure rules, which double-count and artificially inflate costs. Resolving the deceptive regulation is a top priority for the AIC, which has already been lobbying the new Labour government for a solution, and has had meetings with economic secretary Tulip Siddiq.

Brodie-Smith notes the current cost disclosure rules are most detrimental to wealth managers and fund of funds, deterring them from allocating as much to private equity trusts as they might like. This view is echoed by Hewitt, who says keeping fees low is front of mind for many wealth managers – hence their avoidance of expensive trusts.

“If you’re a wealth manager, you might want to put your client into HG Capital, but you have your own costs to think about. The underlying costs on private equity trusts are horrendous, and you’re upping your own fees massively before you’ve even started,” he says.

“If you want lower costs, you can go down the ETF route of course, but just look at the performance of private equity. Now, I wish the costs were lower, too, but over the long run that’s where you make a lot of money because they’re exposed to phenomenally attractive assets that are growing.”

Read the rest of this article in the September issue of Portfolio Adviser magazine