At the same time he says there was a push factor from a client, who wanted to do something a bit different with their pension fund, coinciding with the introduction in 2021 of the LTAF structure, that would allow funds' access to private markets.
The client, Cushon, a master trust that began as a start-up (and is now owned by NatWest), was looking for ways to offer something different.
Horne says: "As part of their ambition, they were looking for ways of disrupting, looking for a way to go to market, that included a private market asset allocation, to be different.
"They had started to believe that private assets could deliver returns at a premium over public markets – they had a strong belief that private assets could have a positive impact from a client perspective."
Cushon's initial plan was to invest only in renewable energy and forestry, but the solution Schroders came back with was a single fund with multiple asset classes, which invested across a range, including private equity, real estate and 'natural' capital (or forestry). This also helped them from a governance perspective, Horne says.
“We had an ambition, we now had the capability, and we could see the market evolving, and we could see the client demand accelerate our ambition in that space.”
The three funds Schroder has subsequently have distinct different areas of investment.
The climate fund, Schroders Capital Climate+ LTAF, invests in multiple private assets: private equity, infrastructure, real estate and forestry.
The renewable energy fund, Schroders Greencoat Global Renewables+ LTAF, only invests in renewable assets across different types of investment such as solar, and wind, and not just energy generation but its use and distribution.
The third fund has a distinct UK focus, which came about through the British Business Bank Lifts programme, investing in both early stage through to beginning parts of growth.
The fund is a hybrid fund, where 25 per cent of capital will be earliest stage funds, through closed-ended private equity funds, which invest in the UK in a portfolio or early stage businesses; Schroders will then see which businesses have survived the earliest stages and then make direct investments for the other 75 per cent.
Horne says: "It's a different risk profile compared to the other two funds, but we think there's fantastic investment opportunities."
He adds that the investment business at Schroders overseeing this business, Adveq, has spent the past 25 years investing in venture, the past seven years of which have been under the Schroders' umbrella.
