UK - Legal & General Property (LGP) and Legal & General Investment Management (LGIM) are targeting defined contribution (DC) pension scheme members with a new UK real estate fund.
L&G's announcement comes in the same week that CB Richard Ellis Investors launched its own fund targeting the ever-growing DC pensions market in the UK.
Both L&G and CBRE's funds will deploy the majority of their capital in directly held property assets, with some exposure to listed real estate securities and cash instruments for liquidity purposes.
But the latest fund has been structured to offer exposure to direct UK property and listed global real estate stocks in a 70:30 split.
The Hybrid Property fund will invest 70% of its capital in the LGP Managed Property Fund, a balanced UK real estate vehicle, with the remainder allocated to LGIM's Global REITS Index Tracker fund.
It will be able to adapt to market movements by having the flexibility to alter its 70:30 default position of the fund within pre-determined benchmark ranges.
Both parties said the combination of UK direct and global indirect funds would provide greater diversification and liquidity for DC pension scheme investors, while reducing fund expenses and the entry and exit costs typically associated with direct property investment.
Both LGP/LGIM and CBRE's offerings are seeking to capitalise on the continuing UK trend whereby DC schemes are gradually replacing defined benefit (DB) arrangements as the dominant setup for retirement saving.
LGP and LGIM said their hybrid fund had been specifically designed in conjunction with investment consultants to meet the optimum criteria of UK DC pension schemes.
The LGP/LGIM fund has already been selected by an unnamed life platform to provide clients with global real estate exposure and is available to a number of DC pension schemes.
Pete Gladwell, business development manager at LGP, said: "The fund has been designed to enable the growing market of DC pension schemes to gain access to property market returns, while providing them with enhanced diversification and liquidity.
"The levels of interest and seed investments we have already received from investment consultants and DC platforms are a strong endorsement of the fund's optimised structure and signify increasing appetite for innovative products."