Franklin Templeton has received approval for its first open-ended private markets strategy from the Luxembourg regulator, Commission de Surveillance du Secteur Financier (CSSF).

The Luxembourg-domiciled open-ended strategy, launching in early 2025, will offer wealth investors access to a diversified private equity secondaries portfolio, previously limited mainly to institutional investors.

The fund will be co-advised by Franklin Templeton and Lexington Partners, a manager of secondary private equity and co-investment funds.

George Szemere, head of alternatives Emea wealth management, said: “This upcoming launch will mark an important milestone for Franklin Templeton, in line with our commitment to build a diversified, market-leading alternatives business globally. Leveraging Lexington’s world-class investment expertise, we are excited to bring to market this new offering that will broaden access to private markets whilst offering wealth managers a more robust and sophisticated toolbox to help clients accomplish their long-term goals.”

The Luxembourg-domiciled strategy will provide wealth investors access to a diversified private equity secondaries portfolio, historically available primarily to institutional investors. By opening this asset class to the wealth channel, Franklin Templeton aims to meet the evolving needs of wealth managers and their clients, providing a tool for diversification and long-term capital growth.

Wil Warren, partner and president of Lexington Partners, said: “We are excited to partner with Franklin Templeton on this new strategy. This partnership is a significant step, enabling us to offer our investment strategy to the wealth channel. We look forward to working together to provide investors with access to a diversified private equity portfolio with a focus on long-term capital appreciation.”

Private equity fundraising has surged recently, but exits slowed sharply in 2022 and 2023, remaining stagnant. As a result, secondaries activity has increased, with institutional investors using it to rebalance portfolios.

Over the past decade, institutions committed significant capital to private equity due to strong returns and steady distributions. However, with slowed distributions, many are now overallocated and turning to the secondary market for diversification and liquidity. Secondary managers are capitalising on this, accessing broad asset pools at attractive prices.

According to Franklin Templeton’s data, the secondaries market has grown from $28 billion in 2013 to around $130 billion in 2024, becoming a critical part of private equity, offering liquidity, diversification, and faster distributions.

Jake Williams, head of international alternatives product strategy, said: “Over the last few years, the industry has made great strides in opening up access to private markets through the introduction of various fund structures. With this new open-ended fund structure, we are pleased that we will be able to offer investors in the wealth channel access to private markets with lower investment minimums and more flexible features.”