Invesco Real Estate, the $94 bn (€86 bn) global real estate investment business of Invesco Ltd, has launched a fund exclusively for Defined Contribution (DC) pension schemes in the UK.
The Invesco Global Direct Property Fund (GDPF) is investing in direct global real estate, offering what it says are 'potentially higher returns and a lower risk profile' through portfolio diversification and access to a mainstream global asset class at low cost.
DC pension schemes typically invest in direct UK-only property or global REITs. In contrast, investing in global direct real estate can potentially reduce risk and enhance returns. The UK comprises less than 5% of global investible real estate and, by investing globally, DC investors can benefit from stable income backed by physical buildings but without the risk of being constrained to a single country.
At launch, the fund will invest its assets globally through Invesco Real Estate managed funds that predominantly focus on direct properties in Europe, the US and Asia Pacific developed markets. Investors into GDPF will be investing in a direct real estate portfolio of more than $30 bn - one of the largest directly managed portfolios in the market. Examples of underlying investments include residential in Japan, logistics facilities in South Korea, healthcare in the US, and luxury retail in Milan.
Investors are being told they will also benefit from Invesco Real Estate’s 'active approach' to reducing CO2 emissions, water and waste. GDPF has specific liquidity terms for DC schemes, platforms and master trusts, it added.Sachin Bhatia, head of pensions and EMEA Consultant Relationships at Invesco, said: 'GDPF finally gives DC members access to this asset class via a dedicated DC fund, which we believe will improve member outcomes.'
Kate Dwyer, head of UK distribution, Invesco, explained: 'We have long seen demand among DC schemes to invest in global direct real estate but there have been surprisingly few options for them.'
'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.'
Added Simon Redman, MD, head of DC and wealth: '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.'
He 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.'
