Aviva launches global fund of funds

The investment and asset management division of global insurance giant Aviva plans to attract UK pension funds to the vehicle which will be used to make investments in ‘principal and mature markets’ in Europe ex-UK, North America and Asia Pacific.

Aviva Investors, the investment and asset management division of global insurance giant Aviva, has launched a global fund of funds aimed at attracting commitments from UK pension funds.

The London-based firm with more than £23 billion (€27 billion; $36 billion) of real estate assets under management announced today it had launched the Aviva Investors Global Real Estate Fund of funds ‘to meet the growing demand from clients for efficient access to global unlisted real estate assets’.

The fund, aimed at UK pension funds, has been structured as an open-ended vehicle expected to generate annual returns of 10 percent over rolling three year periods. It has been launched with a commitment of an existing external investor, the firm said.

Aviva said it would invest in the ‘principal and mature markets’ of Europe ex-UK, North America and Asia Pacific and would draw from the resources of its offices in London, New York and Singapore.

John Gellatly, head of real estate multi-manager in Europe, said: “Historically, pension schemes have adopted a global approach to equity and bonds and they are now beginning to do the same for real estate.”

“Studies show that the majority of real estate allocations are often concentrated in an investor’s home market, with the result that broader return and diversification opportunities are ignored. However, by looking further afield, pension schemes are able to access a broad range of markets that offer different risk and return prospects and varying investment styles, allowing them to exploit opportunities which are not available in their home markets.”

He added the fund would be able to circumvent many restrictive regulations which currently impact many of the UK’s local authorities from investing in private equity transactions through structures such as limited partnerships. The fund is structured as a Jersey Property Unit Trust and is therefore not constrained under these regulations, he said.

The fund will be managed by fund manager Catriona Allenm, part of Aviva’s 20-person strong global multi-manager team headed by global director Nick Mansley. The team manages more than £5 billion of indirect assets via fund of funds and segregated accounts worldwide