Steven Haywood
Partner

Steven is a Partner in the Corporate department, specialising in Private Investment Funds.

He is experienced in advising both global asset managers and first-time managers on the structuring and formation of private investment funds across alternative asset classes, including direct lending, credit, private equity and private equity secondaries, as well as infrastructure, real estate and healthcare funds. His experience also includes advising institutional investors on their private fund investments and has represented them in transactions involving the sale of portfolios of fund interests, secondary market deals, and co-investments.

Charlotte Wilson
Partner

Charlotte is a Partner in the Financial Services, Funds and Asset Management Group, specialising in financial services regulation and is co-head of the fintech group.

Charlotte’s diverse practice involves advising clients on regulatory compliance, transactional matters, structuring, governance, and commercial partnerships. Charlotte also has an in-depth understanding of fund formation matters, allowing her to provide complex regulatory advice in that context. She works closely with other specialists across the Firm to better understand the implications of regulation in a wider commercial context and provide more holistic, nuanced advice to her clients.

Private Investment Funds – a Year in Review

The relentless search for returns continues to put private investment funds at the forefront of institutional portfolios in the mid-2020s. Spanning asset classes such as private equity, private credit, infrastructure, venture capital and real estate, among other ‘alternatives’, these asset classes have enjoyed sizable growth over the past ten years or so. The second half of the 2020s promises continued change in what funds look like structurally, what they invest in thematically, who they can market themselves to and even how the structures are used. This piece explores the key trends and potential trajectories that will define the next chapter for private funds, private markets, private wealth and private capital.

Private credit holds firm

A key core asset class, which is only growing in momentum, is private credit. It’s still relatively new, but it has grown exponentially in the decade or so since it emerged post- financial crisis. Popular with pension funds and other institutional investors, it is now increasingly mainstream.

Originally, private credit and direct lending funds began to appear after banks started to turn off the lending taps to middle market companies in the aftermath of the financial crisis. This created a void in the credit markets that the private credit funds began to fill. Ironically, banks themselves are now getting into the game, establishing their own private credit divisions, with private equity houses doing likewise. Many are offering this as a distinct business line within their stable of products for investors.

The rise of retail capital

Another source of funding that private equity managers are increasingly looking to tap is the ‘mass affluent’ market, also known as retail capital, or money provided by the ordinary private investor. This is plugging a gap that’s been growing as some large-scale pension funds have started to pull back from their allocation to private equity investments. They are concerned about either the length of time it is now taking to see returns from the sale of these investments as exits start to take longer than just a few years ago or the returns themselves falling.

Private equity has recognised the mass affluent part of the retail market can be attracted by the right products giving those private equity firms another source of capital to deploy. So where mass affluent investing might have been directed at ETFs or mutual funds in the past, there are now products built by private equity firms that would once have been traditionally the preserve of institutional investors. These are high risk, high reward, and more people, willing to make their money work harder can now get a slice of that action.

Part of this has been due to the arrival on the scene over the past year of Long-Term Asset Funds (LTAFs) on the UK market, which specifically allow for retail investors to be tapped through their structure.

LTAFs are a type of UK-authorised, open-ended fund that permit investment from retail investors and are designed to invest in long-term, illiquid assets. There is a growing trend of asset managers creating these vehicles – effectively opening up private equity-style investing for the average investor. They remain niche, but their popularity is rising and they are also starting to be sold and marketed on retail funds platforms.

Governments going for growth

The rise of LTAFs can be seen as a response to a UK Government that wants to encourage investment by mass affluent and retail investors into products which then deploy that capital into rebuilding or building UK infrastructure.

The Chancellor’s Mansion House speech last summer pointed to the Government’s desire to shift the nation from savers into investors. We expect a continued opening up of investing to a wider portion of the population and to get retail investors investing into sophisticated products in a controlled and regulated manner.

Moreover, the UK Government and the FCA have private funds and private markets as a key focus in 2026. The UK financial services sector is a crucial pillar of the Government’s modern Industrial Strategy. This specifically identifies a major initiative to maintain and grow the UK as the world’s leading financial services hub, including by rebalancing to regulate for growth, and driving forward initiatives to open up more private capital. This initiative will be driven by the UK Government’s Financial Services Growth and Competitiveness Strategy, which calls out proposed reforms that will focus on making the UK the most attractive place for managing investments, among others. The Government’s clear intention is to make the UK a world leader for managing private market assets, including by placing portfolio management at the heart of policy making.

Connected to this strategic objective, the regulatory landscape is undergoing significant transformation. In April 2025, HM Treasury launched a consultation on regulations for Alternative Investment Fund Managers (AIFMs) alongside a call for input, signalling the Government’s intention to fundamentally reshape the regulatory framework for fund managers. This initiative has gathered momentum, with the FCA’s Regulatory Initiatives Grid, published in December 2025, setting out a clear timeline for reform. The Grid indicates that in Q1 2026, the FCA will consult on detailed rules about the future regulation of AIFMs, while HM Treasury intends to publish a draft statutory instrument for feedback. This represents a potential revocation of the UK AIFMD regime as it currently stands, replacing it with a framework better suited to the UK’s post-Brexit regulatory environment and growth objectives.

The Government has also committed to reviewing the regulation of venture capital funds during 2026, recognising the critical role this sector plays in funding innovation and supporting high-growth businesses. This review forms part of the broader ambition for the UK to remain a destination for private funds and private fund managers, supporting the desire for investment into the UK’s infrastructure and to help generate growth.

The reforms anticipated in 2026 represent a delicate balancing act: streamlining regulation to enhance the UK’s competitiveness while maintaining robust investor protections. For fund managers, the potential recasting of the existing UK AIFMD regime could offer greater regulatory flexibility and reduced compliance burdens, making the UK an even more attractive domicile for fund-management activities. However, managers will need to monitor developments closely as the detailed rules emerge through the consultation process, ensuring they are positioned to adapt to the new regulatory framework while continuing to meet their obligations to investors. One area, for example, that may pose regulatory scrutiny is management of conflicts (or perceived conflicts) on continuation funds where assets are transferred from one fund into another fund and valuation of the assets transferred.

Private funds structuring trends

Luxembourg remains a popular jurisdiction for establishing funds, as it has been for the past decade, thanks to the introduction of Luxembourg limited partnerships combined with the benefits of AIFMD and the EU marketing passport. But there are several considerations to factor into any decision around fund jurisdiction and there is a need to balance the competing tensions of regulatory requirements against how and where the investment will be marketed, as well as the associated costs with a jurisdiction.

As lawyers and advisers to private funds, if we are establishing a private equity or a private credit fund, then we will naturally lean to a jurisdiction such as Luxembourg. However, Luxembourg means compliance with AIFMD and the fund structuring considerations that brings such as the requirement for an AIFM (and, in some cases, a depository). Equally, an EU AIF with an EU AIFM means that the EU marketing passport should be available, allowing frictionless marketing to EU investors. Or if, for example, we are dealing with quasi-governmental institutions in the UK who are the investors, we may specifically set up a fund structured as an English or Scottish limited partnership in case there are any public policy considerations with regard to fund jurisdiction.

But where you have a single asset structure or where a limited partnership is effectively an acquisition vehicle which has been structured as a fund, then for simplicity and speed to market we might consider jurisdictions like Jersey or Guernsey. These offer ease of set-up and pragmatic regulatory regimes. Further afield, if we are setting up a fund where the primary investor base is in the US, then we might look at Delaware or the Cayman Islands.

From a UK perspective, again, depending on who the fund manager wishes to market the product to or access investment from, it might make sense to set up in Luxembourg. However, if, for example, we’re just acting for a UK fund manager, the fund is going to make UK investments and the investors are only based in the UK, it might make sense for us to use an English or Scottish limited partnerships.

The regulatory reforms anticipated in 2026, particularly the potential revocation of the UK AIFMD regime and the introduction of a new framework for AIFMs, may further influence jurisdictional considerations for fund managers. A streamlined UK regulatory regime could make English and Scottish limited partnerships increasingly attractive alternatives to Luxembourg structures, particularly for managers focused primarily on UK and non-EU markets. However, the final shape of these reforms will be critical in determining whether the UK can offer a compelling alternative to established fund domiciles while maintaining the regulatory credibility that institutional investors require. Navigating these competing tensions allows for jurisdiction selection to be optimised.

The professionalisation of wealth

One of the themes of the last year we have noticed is high-net-worth individuals (HNWI) who have built their wealth in asset management or industries like private equity increasingly looking to structure vehicles to hold that wealth (in much the same way as they create vehicles or funds to manage their own clients’ money). Often this wealth is substantial and built from carried interest and co-investment returns.

Where in the past they might have looked for a trust structure, today an increasing trend we are seeing is limited partnerships being used, often combined with an underlying investment company. This is essentially the same ‘structuring technology’ that you would use in private funds but instead it is being applied in the private wealth space, Here it’s often just for a single HNWI or family looking for a structure to hold personal wealth and for inter-generational transfer or succession planning. These ‘family limited partnerships’ often combined with a ‘family investment company’ are ‘private fund’ style private wealth structures.

A generational shift

Intergenerational wealth transfer is bringing with it a shift in investment priorities. Younger generations tend to view wealth differently to their parents, placing greater emphasis on using capital to promote wider societal benefits alongside financial returns. These changing attitudes within families and across society more broadly – are influencing how money is deployed and driving the creation of investment products designed to meet this evolving demand.

The offspring of private equity founders are often involved in the management of the types of vehicles we create or, in some cases, they wish to play a more active role. If they then choose to invest that money the aim is still to generate a return, but they are focused elsewhere, perhaps on technology-type investments as opposed to just the buying out of companies. They might consider taking minority stakes in different types of investments or they might consider investing the money in a completely different asset class such as social philanthropy funds or climate investing. In this generation, we are routinely seeing different attitudes and different priorities.

Real estate is well-positioned to capitalise on this trend through investments in sustainable buildings, affordable housing, community infrastructure, and climate-resilient developments. Proposed regulatory reforms could facilitate the creation of real estate impact funds that attract capital from pension funds, family offices, and HNWIs seeking acceptable returns while contributing to social benefits and sustainable markets.

A social good, with handy returns

Changes in attitudes are influencing the types of private funds that private equity managers are creating on a thematic level. Alongside traditional buy-out funds this can manifest itself as a distinct asset class where the returns might be lower than a traditional private equity fund, but there are nonetheless opportunities for returns. For example, social philanthropy funds, particularly around climate investing, are increasingly being marketed. Bigger institutional investors or fund managers are teaming up with philanthropic foundations and institutes to launch products which are aimed at finding and providing solutions to challenges such as climate change or contributing to society while still making good returns for investors. We are also seeing the creation of funds whose investment objective is almost dual purpose, for instance both commercial and ‘social’. So, that may be investments in developing technology such as drones which can be used to deliver medical products across remote regions of Africa while also being used for commercial outcomes, such as delivering parcels across America.

In summary

Private investment funds continue to evolve in their shape and size. Private credit is an increasing bedrock, being bolstered and expanded – somewhat ironically given why the asset class originated in the first place – by banks entering the space and launching their own private credit divisions. But, for example in the UK, the future of asset classes looks to have a stronger retail investor involvement than ever before, aided by a UK Government keen to get people to put their money to work in the national interest of growth rather than solely accruing interest. The UK’s regulatory environment is seeking to provide clarity for fund managers and protection for those willing to put their money into unfamiliar, though ultimately more rewarding, places.

A transfer of wealth between generations in the years to come is prompting a change in attitudes in where money should be invested. The increase in investments with a perceived social good is set to continue, triggering a shift in asset classes. Where funds are set up and located remains more of a constant, with the core fund jurisdictions of Luxembourg and the Channel Islands still as popular as ever for UK-based fund managers establishing and launching private funds.

Private investment funds then are a vibrant, dynamic space, bringing together new thinking and traditional approaches. 2026 promises to be another interesting year for all concerned.