London CIV has hired Aviva Investors to manage a new inflation-linked real assets fund for UK local authority pension funds.
The Inflation Plus Fund will target long-lease property and ground rents, and will have the ability to invest in infrastructure debt and real estate debt.
Two of the 32 pension funds represented by London CIV – for the London boroughs of Redbridge and Bexley, respectively – have seeded the fund with £107m (€118m).
It is the latest collective investment vehicle to be set up by London CIV and follows the creation of an infrastructure fund late last year.
“The demand for alternative income from our investors will likely increase, particularly given the current environment so this is an important addition to the London CIV suite of funds,” said Kevin Corrigan, interim CIO at London CIV.
Corrigan said Aviva Investors had a “long track record across the real assets sector and strong origination capabilities”.
Aviva Investors has been running a series of liability-matching real assets strategies for several years and in 2018 it merged its real estate, infrastructure and debt capabilities to create a dedicated real assets platform.
“In this challenging investment environment, predictable, inflation-linked returns offer an attractive defensive quality to portfolios, making long income a natural destination for pension schemes as they look to reduce risk,” said Mark Versey, CIO for real assets at Aviva Investors.
“Our hope is that other London borough pension funds will follow Bexley and Redbridge into the fund and we anticipate it growing significantly over time.
“We look forward to helping this group of local authorities meet their investment objectives and cash-flow requirements on behalf of their members.”
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