BlackRock has launched a fund targeting investments across the real assets sector for UK defined benefit pension schemes.
The investment manager said its UK Strategic Alternative Income Fund would target a net 5% annual return from infrastructure debt, renewable energy, real estate debt, long lease property and direct lending.
The semi-open-ended fund launch comes after BlackRock this year created a real assets group headed by Jim Barry to combine infrastructure and real estate.
Andrew Stephens, head of intermediated clients for the UK, said the country’s pension schemes were “increasingly embracing less liquid strategies to enhance returns” but that such investments “are not often easy to exploit”.
He added: “By creating a single portfolio that provides exposure to a range of alternative income sources, we are helping schemes access these markets more easily, while also providing diversification.”
The fund, which has a four-year lock-in, will invest in a mixture of funds, bespoke mandates and direct transactions.
Stephens said strong asset returns since 2009 “haven’t fed through” to improved funding levels for defined benefit pension schemes.
“Forward-looking returns from public markets alone won’t meet their objectives,” he said.
“With many schemes’ recovery plans being in excess of 10 years, the illiquidity premia that schemes can source from private markets are compelling, and UK pension schemes, with their long investment horizons, are ideally positioned to benefit.”
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