UK's LTAF broadens its horizons into the timber sector
Fulcrum Asset Management, a leading asset management firm, has taken a significant step forward in its private market offerings by partnering with Domain Timber Advisors. This move adds a timber allocation to the firm's existing portfolio, which includes private equity, value-add real estate, value-add infrastructure, natural resources, and private credit.
The collaboration with Domain Timber Advisors, a subsidiary of the US alternative asset manager Domain Capital Group, is part of Fulcrum Asset Management's strategy to provide its clients with diverse investment opportunities. The new timber allocation offers an evergreen investment structure, providing exposure to US forestland.
This development comes as part of the launch of Long-Term Asset Funds (LTAFs) in the UK, designed to enable defined contribution funds to access long-term private market investments. LTAFs, such as the one offered by Fulcrum Asset Management, are a new fund structure aimed at helping defined contribution funds overcome regulatory restrictions that have traditionally limited their access to long-term private market investments.
HSBC Pension Scheme is one of the investors in Fulcrum Asset Management's LTAF. The scheme, which manages a combined total of £35bn (£28bn in Defined Benefit assets and £7bn in Defined Contribution assets), announced its partnership with Fulcrum Asset Management in March.
Russell Picot, chair of the HSBC Bank (UK) Pension Scheme Trustee Board, commented on HSBC's investment in the LTAF, stating that the goal was to improve expected member outcomes by targeting better risk-adjusted returns through diversifying the assets in which members' savings are invested.
Fulcrum Asset Management also plans to launch a commingled version of the LTAF later this year, subject to regulatory approval. This version would be open to multiple investors, further expanding the fund's reach. The launch of the commingled LTAF will provide more institutions with the opportunity to invest in this unique timber allocation, offering a diverse and long-term investment strategy.
Assets such as timber, infrastructure, and private equity are traditionally underrepresented in DC portfolios due to regulatory restrictions. However, with the introduction of LTAFs, defined contribution funds can now gain access to these long-term private market investments, potentially leading to more balanced and diversified portfolios.
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