REAL ESTATE - AP3, the third Swedish buffer fund, has awarded a second mandate in as many weeks to Aberdeen Property Investors – this one for a €250m Asian property fund-of-funds. The fund is scheduled to complete its fundraising by Q2 2007.
The mandate will give the pension fund "broad exposure to Asia—Pacific" via investment in around 10 funds over a four-year period, according to Aberdeen Asia director Bo Ljunglöf.
AIPP Asia will invest at least 40% in mature markets such as Japan, Australia and Singapore, and no more than 40% in higher-risk markets such as China. However, he added: "Asia is not just one market – different markets have different risk characteristics."
He pointed out that as demographics made Europe less attractive to investors, they increased Asia’s appeal.
"Asia is a good diversifier for US and European investors," he said. "It makes sense for them from both a risk and a return perspective. The regional growth story we all know. As a long-term investment, it’s hard to avoid."
AP3 aims to diversify the risk in its real estate portfolio by increasing the international allocation to around 50% of its real estate portfolio. According to the last published figures – for the period January–June 2006 – real estate accounted for 2.4% of the fund, returning 18.8%.
The new mandate comes just over a month after the scheme asked Aberdeen to create a European funds portfolio of a similar size to the Asian fund.