In an environment where institutional investors are increasingly turning to infrastructure as a way to tackle volatility, Schroders Capital is making an impact with deals that underscore its prowess in alternative investments.
The first sees Dutch pension provider APG entrusting €425 million to Schroders for its inaugural infrastructure debt allocation, signaling a vote of confidence in sustainable, yield-generating assets.
The second marks a partnership with UK wealth manager Hargreaves Lansdown to embed Long Term Asset Funds (LTAFs) into Self-Invested Personal Pensions (SIPPs), democratizing access to illiquid opportunities for everyday savers.
These moves highlight Schroders’ focus on catering to sophisticated institutions while broadening offerings for retail portfolios.
The APG appointment represents a milestone in infrastructure debt, a niche that blends the stability of bonds with the growth potential of real assets.
APG Asset Management, one of Europe’s largest pension investors with over €600 billion in assets under management, has selected Schroders Capital to manage this €425 million mandate.
This is APG’s first dedicated foray into infrastructure debt, aimed at diversifying its portfolio amid rising interest rates and geopolitical uncertainties.
Infrastructure debt typically involves lending to projects like renewable energy farms, toll roads, or data centers—assets that offer predictable cash flows and inflation-linked returns.
Schroders Capital, the alternatives arm of the €900 billion-plus Schroders group, brings a robust track record to the table.
With more than €25 billion in infrastructure assets globally, the firm emphasizes ESG-integrated strategies that prioritize low-carbon transitions.
Chris Justham, Head of Infrastructure Debt at Schroders Capital:
“Infrastructure debt provides resilient, long-term yields in an era of economic flux, and our expertise in sustainable financing aligns perfectly with APG’s responsible investment ethos.”
For APG, the decision underscores a strategic pivot: pensions are under pressure to deliver steady returns for retirees while meeting net-zero commitments.
By allocating to infrastructure debt, APG taps into a market projected to grow to $1.5 trillion globally by 2030, per Preqin estimates, offering diversification beyond equities and traditional fixed income.
This deal isn’t isolated; it reflects a broader surge in institutional appetite for infrastructure amid Europe’s green energy push.
The EU’s €1 trillion NextGenerationEU fund and similar initiatives worldwide are fueling demand for debt financing in renewables and digital infrastructure.
Schroders’ mandate will likely target senior secured loans to proven operators, minimizing downside risk while capturing upside from operational efficiencies.
As Justham noted,
“Our approach combines rigorous due diligence with a focus on essential services, ensuring capital preservation alongside attractive risk-adjusted returns.”
For the sector, this validates infrastructure debt as a “safe harbor” asset class, potentially drawing in more conservative allocators like sovereign wealth funds.
Shifting gears to the retail front, Schroders Capital’s collaboration with Hargreaves Lansdown breaks new ground by introducing the first LTAFs into SIPPs.
LTAFs, a UK regulatory innovation launched in 2022, are open-ended funds designed for illiquid assets like private equity, infrastructure, and real estate. Unlike traditional funds, they allow daily dealing while holding long-term holdings, addressing the liquidity mismatch that has long sidelined retail investors from high-return alternatives.
Hargreaves Lansdown, the UK’s direct savings platform with a reported 1.9 million clients and £140 billion in assets, will integrate Schroders’ LTAFs into its SIPP offerings.
This enables pension holders to allocate tax-advantaged savings to diversified portfolios of private markets assets, potentially boosting long-term growth.
Nathan Long, Head of Pensions at Hargreaves Lansdown:
“This partnership empowers our clients to access sophisticated investments previously reserved for institutions. LTAFs in SIPPs could transform retirement planning by blending accessibility with the illiquidity premium—think 3-5% higher returns over public markets, net of fees.”
The implications are seemingly profound for retail investors, who have historically been gated from private assets due to high minimums and lock-ups.
With UK pensions facing a £400 billion savings gap, per government data, this move could accelerate adoption.
Schroders’ LTAFs will span multi-asset strategies, including the infrastructure debt expertise honed with APG.
Schroders’ Justham said:
“We’re bridging the gap between institutional-grade opportunities and everyday savers.”
Notice periods of up to 90 days ensure prudent liquidity management, but the payoff is exposure to resilient, income-generating assets.”
For institutions like APG, they offer tailored, ESG-aligned solutions amid yield hunts.
For retail via Hargreaves, they herald inclusivity, potentially reshaping how we build wealth.
Yet challenges loom: liquidity risks in LTAFs and valuation opacity in infrastructure debt demand vigilant oversight.
As markets navigate inflation and elections, Schroders‘ strategy—blending scale, sustainability, and accessibility—could redefine asset allocation for the decade ahead.