Invesco Real Estate said it has launched a direct global real estate fund exclusively for UK defined contribution (DC) pension schemes.
More than two years ago, Invesco said it was opening its Global Real Estate Fund to UK DC pension schemes, but the newly launched Invesco Global Direct Property Fund (GDPF) is the first to target DC investors in the UK specifically, with liquidity terms designed for DC schemes, platforms and master trusts.
“We have long seen demand among DC schemes to invest in global direct real estate, but there have been surprisingly few options for them,” said Kate Dwyer, head of UK distribution at Invesco.
At launch, the fund will invest globally through Invesco Real Estate managed funds that predominantly focus on direct properties in Europe, the US and Asia-Pacific developed markets. Invesco said investors in GDPF “would, therefore, be investing in a direct real estate portfolio of more than US$30bn, which is one of the largest directly managed portfolios in the market today”.
Examples of underlying investments include residential in Japan, logistics facilities in South Korea, healthcare in the US, and luxury retail in Milan.
“The launch of GDPF represents, in our view, a new approach for the DC investor and demonstrates Invesco’s commitment to being a leading provider of investment solutions to UK DC schemes and their members.
“This fund builds on Invesco’s long-term track record in the institutional market and our belief that DC stakeholders deserve the same opportunities as sophisticated institutional investors but with terms aligned to their needs. GDPF not only supports the DC industry’s focus on increasing allocation to alternative asset classes but also the UK government’s value for money consultation.”
Invesco said UK DC pension schemes typically only invest directly in their domestic property market or globally via listed real estate investment trusts. Investing in global direct real estate can potentially reduce risk and enhance returns, the firm added.
Simon Redman, managing director and head of DC and wealth at Invesco Real Estate, said: “Improving outcomes for DC members through easily accessible investments in private markets is a key focus for many at the current time. Real estate is by far the largest private markets asset class, but it has not been fully optimised in portfolios. Despite recent macroeconomic news and equity and bond market volatility, real estate as an asset class has continued to offer attractive historic performance and low volatility.”
Redman added: “With over 95% of real estate markets around the world being outside of the UK, they offer different opportunities to those available in the UK and also react differently to market circumstances – there are compelling opportunities to invest in sectors such as Japan cold storage, Australian student housing, and US single-family housing which are simply not available in the same way in the UK.
“GDPF will provide diversification through access to international markets and sectors that can be less volatile and potentially offer more rewarding income and growth.”
Sachin Bhatia, head of pensions and EMEA consultant relationships at Invesco, added: “GDPF finally gives DC members access to this asset class via a dedicated DC fund, which we believe will improve member outcomes. The fund leverages our £73.8bn real estate business where we have 40 years’ experience and, at its core offering, has an implicit sustainability focus with an explicit business-wide net-zero target, which we believe enhances potential returns.
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