The UK's Financial Conduct Authority has authorised Schroders Capital to launch the first Long Term Asset fund (LTAF).
The regulator explained that the LTAF is a new category of open-ended authorised funds, which are designed to invest in long-term assets.
The launch was supported by the creation of a new regulatory regime that came into effect in 2021.
The FCA worked with the Bank of England, Treasury and wider industry to make sure that longer-term, less liquid assets can flourish and investors can understand the risks associated with LTAFs.
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The ability to invest in illiquid assets is important to support economic growth and the transition to a low carbon economy, the watchdog said, but should be done through "appropriately designed and managed investment vehicles".
Alongside the authorisation of the first LTAF, the FCA is also seeking views on how to further improve asset management regulation with a "more modern and tailored regime", to make sure it keeps up with developments in technology and fosters innovation.
Sarah Pritchard, executive director of supervision, policy and competition - markets at the FCA, said the rules were made in order to create an environment "where investors that wish to invest in productive finance assets can more easily do so" and that it was thanks to market participants that such product innovation was able to take place.
Schroders Capital will provide defined contribution and other eligible investors access to the LTAF, the firm said.
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Peter Harrison, group CEO of Schroders, said the LTAF structure will allow a wider range of UK savers to take advantage of investing in private assets, and in turn support industries and companies with long-term capital.
The fund will "enable these companies to start benefiting from big pools of long-term capital and, in turn, help long term savers", he added.
David Seex, head of private asset solutions at Schroders Capital, added: "We are dedicated to innovating and providing our investors with ways to unlock the broadest range of investment capabilities.
"The LTAF regime is an exciting regulatory initiative that will allow pension savers to invest in private assets and we are focused on leading with our own solution."
Economic secretary to the Treasury Andrew Griffith said the introduction of the LTAF system will replace the European Long-Term Investment fund and will be tailored to the "needs of the UK market and investors".
"This new vehicle can provide a significant boost to investment in productive areas of the economy - including much-needed infrastructure and decarbonisation products. LTAFs will also help to diversify investment portfolios of savers - providing long-term security and delivering greater returns."
