EUROPE - An unnamed Swiss insurer has invested €100m via several of its subsidiaries in an ING Real Estate Investment Management fund of funds (FoF) vehicle launched last week.

The European Property Strategy (EPS) offers investors access to a range of non-underlying non-listed real estate funds, all of which are managed within the ING REIM group. ING REIM said it was targeting investors constrained by their investment policies to highly transparent vehicles.

Although it claims to avoid a ‘fee on fees' arrangement common to FoFs, EPS does charge a management fee to cover increased handling costs of their investments.

ING REIM spokeswoman Anneke van der Galiën said the EPS would appeal to institutional investors "seeking direct exposure and diversification out of their domestic real estate markets, and requiring a regulated environment in an open-ended product".

According to Preqin, a provider of data on alternative assets, 82% of FoFs are private closed vehicles. Only 15% are open-ended.

EPS's €18bn underlying portfolio comprises 14 non-listed European funds - one of the largest non-listed European property portfolios. With forecast total return of 8%, the fund targets investors who would not otherwise be able to gain exposure to ING REIM Europe's property funds because of restrictions on investing in closed-ended vehicles - the structure of most of ING REIM's funds.

The group of investors includes insurance companies and "other [smaller] investors who allocate limited amounts", said Galiën.

In a nod to concerns over due diligence being carried out by a fund management firm on its own funds, the EPS will be directly under the supervision of the Dutch financial services regulator. In addition, an advisory board of investors will give investors "substantial influence in investment decisions".

A report published last week by Preqin claimed most FoF managers had been "largely inactive" over the past 12 months. "They were either reluctant to commit before the market bottomed out or delayed new investments at the request of investors keen to avoid additional capital calls," said Preqin's Andrew Moylan.

However, the report predicted FoF managers would adapt their approach to take advantage of opportunities in the current market, with most gearing up to make acquisitions in the year ahead.