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Schroders Launches Multi Private Credit Fund, Cites UK Defined Benefit Pension Demand

Schroders is launching a Multi-Private Credit Fund which will invest in a range of private credit assets, including corporate direct lending, real estate debt and infrastructure debt. The new product is coming to market in response to the growing demands from U.K.-based defined benefit pension schemes to allocate to the long-term and alternative income streams that private credit asset classes can offer. The Schroder Adveq MPCF is a single closed-ended vehicle.

Russell, Smith, Co-Head of UK Institutional, Schroders, said:

“UK DB pension schemes are increasingly looking to harness the alternative and consistent income streams that private credit assets can deliver. Working closely with Schroders’ in-house private credit specialists, with targeted support from external managers, this fund will provide a one-stop solution to a diversified portfolio of private credit asset classes for UK schemes.

“UK DB pensions are increasingly mature and thinking about their end games. MPCF is designed to deliver a source of contractual cash flows that will help our clients meet their long-term objectives.”

In addition to the broad sector exposures, MPCF will be geographically diversified with a focus on investment opportunities in the US and Europe.  

Ji-Eun Kim, Head of Multi-Private Asset Investments, Schroders, commented:

“The low yield environment has made it increasingly difficult for UK DB schemes to meet their long-term income targets. A diverse blend of private credit assets delivered by Schroders’ investment expertise has the potential to meet the needs of our clients who would previously have relied on traditional fixed income assets.”

Schroders’ recent Institutional Investor Study 2020 indicated that investors plan to ramp up their allocations to private assets from 12.8% a year ago to 14.1% over the next 12 months, with 46% stating that an increase in their allocations to private assets would help manage risk.

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