AEW launches new liability-matching UK fund

AEW UK, cornerstoned by Aviva Investors Global Indirect Real Estate (GIRE), has launched the Real Return Fund, a new strategy which seeks to align the benefits of property with the liabilities of pension funds.

Aviva Investors Global Indirect Real Estate (GIRE), on behalf of institutional clients, has provided £42.5 mln (€54.6 mln) of initial capital.

The fund’s strategy will look at investing in all sectors to allow access to the wider UK investible universe. AEW said the sectors will likely include ‘alternatives’ such as housing, leisure, healthcare, hotels and social infrastructure, blended together with opportunities in the traditional markets where property fundamentals are strong.

'We are pleased to be supporting this new launch and strategy which matches the return objectives and liability matching requirements of many of our clients who, as mature pensions schemes, are seeking long term relatively stable returns,' said John Gellatly, Aviva Investors’ head of EMEA GIRE.

Ian Mason, portfolio manager, AEW UK Real Return Fund said, 'So far the reaction from potential investors has been very supportive and we already have terms agreed for an additional £20 mln from a major UK pension fund.'

The fund challenges 'the way investors can think about property as a real asset and match for liabilities', added Mason. 'Increasingly, property does not work as a pure "growth" asset with the inherent volatility from funds all chasing the same benchmark. Property portfolios should be dynamic and reflect the growth in the real economy rather than following a static benchmark.'

The AEW UK Real Return Fund is an FCA-regulated, open-ended, core-style vehicle with a total real return target of 4% per annum net of fees and expenses.

Mason: 'We believe it is property skills, rather than long leases that should ultimately preserve capital and drive performance. We are aware that many pension schemes still require the higher returns from defensive growth strategies from real assets to match their inflation-linked liabilities.'