AHV/AVS, the CHF34bn (€27.8bn) Swiss Federal Social Security Fund, is seeking to shift its real estate portfolio away from listed real estate.
The buffer fund has tendered a $35m-50m (€25m-37m) mandate for a multi-sector, multi-country fund for the Asia Pacific region.
Eric Breval, chief executive at the AHV/AVS, told IPE: “We are not looking for sector funds but more for broadly diversified vehicles.”
Nearly 10% of the fund’s real estate portfolio – valued at CHF1.8bn, or 5% of overall assets – is dedicated to Asia, but only via listed vehicles.
“This new mandate,” Breval said, “is aimed at non-listed real estate funds.”
As a whole, the real estate portfolio consists mostly of listed real estate, apart from CHF80m in directly held Swiss properties.
With the new mandate, the AHV/AVS aims to increase diversification.
The buffer fund is seeking managers investing actively in core or core-plus properties via pooled funds, closed-end or open-ended, with a maximum leverage of 50%.
Debt investments are prohibited.
The AHV/AVS said it hoped the new real estate investments would help it achieve its target return of 2-2.5% over the long term.
Last year, the buffer fund – including the invalidity fund (IV) and the fund for maternity leave and military service (EO) – returned 6.5% in total.
Over the last three years, the real estate portfolio produced a 7.3% annualised return.
Over the first half of this year, however, foreign listed real estate lost more than 7.5%, bringing the total six-month performance for this part of the portfolio to 0.31%.
Interested managers have until 15 November to apply for the mandate.
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