Today’s investors have a wide menu of investment options from which to choose. Most will be familiar with public stock and bond markets, but what about the growing universe of private markets which provide opportunities to invest in unlisted companies, major infrastructure projects and more?
Until recently, such private market investments could be out of reach for everyday investors, but there’s a new way in for experienced investors thanks to Long-Term Asset Funds (LTAFs).
LTAFs are part of the now wider range of funds which investors can choose from to access a variety of investments and assets, including tapping into illiquid investments that were once only available to big institutions. Each comes with its own rules and specific elements, including how quickly you can access your cash and how investments are valued.
The underlying assets also play a distinct role in a portfolio and understanding the characteristics, similarities and differences can be helpful when thinking about broader portfolio construction. In this article we’ll look at reasons investors might choose one over the other in a portfolio. LTAFs, Investment Trusts, Funds and Exchange Traded Funds (ETFs).
This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment and any income will rise and fall, so you could get back less than you put in. Tax rules change and benefits depend on personal circumstances.
Here’s how they compare:
Long-Term Asset Funds (LTAFs)
A new type of fund structure that makes private markets more accessible to retail investors. They can be accessed via a Self-Invested Personal Pension (SIPP), or a general dealing account. The UK government has announced that from April 2026 they’ll also be available via a Stocks and Shares ISA.
Why consider them?
Invest in previously hard-to-access areas such as private equity or infrastructure.
Target potentially higher long-term returns – this comes with higher risk and less access to your money.
A consideration for experienced and long-term focused investors (those looking to invest for at least five years or more) who do not need to dip in and out quickly.
Portfolio role:
Open the doors to private markets: private equity, private credit, infrastructure projects, and more. Because these assets are harder to sell quickly, they typically aim for higher potential returns, which may include both growth and income, over longer periods. By virtue of not being traded daily they can also act to dampen overall portfolio volatility.
LTAFs can therefore help diversify a traditional portfolio, but investors should weigh these benefits against the increased complexity and limited access. Charges are higher than the other investments compared here to compensate for the active investment required to source and manage the underlying investments. These funds still typically aim to generate a market beating return after accounting for costs.
Long-Term Asset Funds are considered high-risk investments for experienced investors. They should be held for the long term, typically 5 to 7 years or more. We suggest they form a small part, no more than 10%, of a diversified portfolio.
Access and pricing:
Investors can buy into the funds monthly, while redemptions are typically offered quarterly. Each fund will list its specific access information in its key investor information document (KIID) and/or prospectus. Trades are made at the prevailing net asset value, meaning you are buying into and out of the fund at its current value, similar to public market funds. Importantly, as the underlying assets are not listed, valuations are not set daily but are generally published monthly. LTAFs have a minimum investment amount, usually from £10,000.
Investment trusts (ITs)
These are companies in their own right, which are listed on a stock exchange, with a fixed number of shares you can buy and sell anytime the market is open. They can be accessed via ISAs, SIPPs or a general dealing account.
Why consider them?
They can invest in public and private companies, as well as specialist sectors like healthcare or technology.
Share price updates in real time and moves with market demand, offering opportunity but also volatility.
Overseen by an independent board.
They can focus on property via Real Estate Investment Trusts (REITs).
Portfolio role:
Investment trusts can invest in a wide variety of assets, including listed stocks and securities, as well as companies not listed on the stock market or other assets (like property) that aren’t easily bought elsewhere.
These trusts have a fixed-share structure, meaning there are a set number of shares that are bought and sold without impacting on the underlying investment portfolio. This in turn means managers aren’t forced to sell assets when people want their money back, but for trusts investing in unlisted assets it can also mean the share price moves very differently to the value of the assets in the portfolio. Between 2010 and 2025, the average investment trust has traded at a discount, this means the shares are worth less than the assets. Past performance is not a guide to the future.
Access and pricing:
Investors buy and sell shares in investment trusts just like any other listed company and returns will be based on both the appreciation (or otherwise) of the share price, plus any dividends paid along the way. These funds offer good access to investments with daily dealing and liquidity, which also brings exposure to market sentiment and volatility.
Exchange-Traded Funds (ETFs)
ETFs are baskets of investments (like shares or bonds) which can be bought and sold on a stock exchange, just like individual company shares. They can be accessed via ISAs, SIPPs or a general dealing account.
Why consider them?
Cost-effective way to access a broad range of companies.
Prices update in real time.
Ideal for simple, flexible access to public markets.
Portfolio role:
ETFs provide cost-effective access to global stock and bond markets, or even specific sectors and themes. Historically, ETFs have been associated with ‘passive’ investing strategies - strategies that replicate the make-up of an index and aim to mirror its performance rather than outperform it. This, of course, has made them cheaper than other investments to run.
Access and pricing:
Like investment trusts, ETFs are traded on listed exchanges and so they offer daily liquidity and access. Like funds, they invest in public market investments like listed stocks and bonds so performance will be influenced by wider market sentiment and movements.
Funds
A fund is an investment that pools together money from lots of individuals. The fund manager then invests the money in a wide range of assets e.g. UK shares, overseas shares, bonds etc. Each investor is issued units, which represent a portion of the holdings of a fund. They can be accessed via ISAs, SIPPs or a general dealing account.
Why consider them?
Beginner friendly and often with a low minimum investment.
Active funds benefit from a fund manager’s expertise and time spent aiming to pick the best opportunities.
Passive funds can be relatively low cost and aim to follow specific indexes or investment themes.
Priced once daily.
Portfolio role:
Funds provide access to public market investments such as shares and bonds. They are either actively managed - meaning that a fund manager picks investments they believe will do better than the overall market - or passive where the fund aims to match the performance of a particular stock market index or benchmark.
A term used to describe the underlying value of a company minus any liabilities (debt).
They are usually highly accessible, often requiring only a small minimum investment and with many available to suit different goals and risk preferences.
Access and pricing:
Funds are highly liquid but are not traded on an exchange. This means units in the fund are typically bought from the company that manages the fund or through a broker, with purchases and redemptions made at the prevailing net asset value, just like with LTAFs. The difference is that the NAV is calculated at the end of each trading day and is influenced to a greater extent by market fluctuations. Funds may also have a minimum investment amount.
What should you consider when picking investments?
Risk and return: Private assets (like those in LTAFs) can offer the potential for bigger rewards, but they might also come with bigger risks (depending on the specific investments) and are much harder to cash in quickly.
Costs: LTAFs and investment trusts can have higher fees, reflecting the extra work and expertise involved. ETFs and some funds are generally cheaper. Remember to check any platform charges that an account provider may include.
Tax treatment: Depends on your personal situation and fund type (some are more tax efficient than others).
Access to funds: Ask yourself, “How quickly will I need my money?” ETFs, funds and investment trusts offer more flexibility; LTAFs could be considered by experienced investors that can “lock away” their investments for longer periods.