AEW UK, part of the Paris-based real estate investment manager, AEW Europe, has launched its Real Return Fund, a strategy which seeks to align the real benefits of property with the liabilities of pension funds.
The vehicle has been backed to the tune of £42.4 million by Aviva Investors Global Indirect Real Estate, the multi-manager real estate business of UK insurer Aviva, and an additional £20 million from an unnamed UK pension fund has been agreed.
The open-ended, core fund has a return target of 4 percent per annum net of fees and expenses.
The strategy will see AEW UK look at investing in all sectors, which will likely include ‘alternatives’ such as housing, leisure, healthcare, hotels and social infrastructure, as well as the traditional markets. Given its multi-front investment strategy, the firm said the fund should not be benchmarked against any IPD benchmark.
“The fund is challenging the way investors can think about property as a real asset and match for liabilities. We have found it very rewarding to partner with Aviva on this new strategy,” said Ian Mason, portfolio manager of the fund. “They too recognise that, increasingly, property does not work as a pure ‘growth’ asset with the inherent volatility from funds all chasing the same benchmark. Property portfolios should be dynamic and reflect the growth in the real economy rather than following a static benchmark.”
John Gellatly, Aviva Investors Global Indirect Real Estate’s head of EMEA said: “We are pleased to be supporting this new launch and strategy which matches the return objectives and liability matching requirements of many of our clients who, as mature pension schemes, are seeking long term relatively stable returns.”