Aviva Investors has launched the UK’s largest long-term asset fund (Ltaf), a new fund category designed to provide access to illiquid and private market assets.
The Aviva Investors Real Estate Active LTAF is also the asset manager’s first fund to fall under the Ltaf regime after receiving regulatory approval at the end of March.
The Ltaf was designed after several open-ended property funds in the UK, including the £1.8 billion Aviva Property Trust, were forced to gate as market circumstances resulted in a lack of immediate liquidity.
Liquidity risks for property funds have continued to grow across Europe, leading the European Central Bank to call for greater regulatory oversight of real estate investment funds.
Aviva Investor’s new fund consists of an initial £1.5 billion portfolio of direct real estate assets seeded by Aviva UK Life with-profit funds.
The strategy aims to enable institutional and professional investors to access investments more easily while better matching the liquidity of the fund’s underlying assets.
Daniel McHugh, chief investment officer of real assets at Aviva Investors, “Real assets are an important element of long-term investment strategies, whether for risk or return diversification or providing regular, inflation-linked income.”
To complement Aviva Investor’s ‘active equity’ approach to real estate equity, the fund will invest in high-conviction locations and emerging themes expected to deliver long-term value.
Tim Russell, senior fund manager at Aviva Investors, will be responsible for managing the fund.
To meet the firm’s carbon policies, Aviva will regularly review ongoing carbon emissions generated by buildings across the fund’s portfolio.
Net zero audits will also be conducted to understand each building’s net zero alignment, transition potential and the solutions available to develop a decarbonisation strategy for each individual asset.
Aviva Investors will also undertake social value audits to assess the social needs of areas immediately surrounding each building in the portfolio.
McHugh added: “They [real assets] are also a vitally important ingredient in the transition towards a just and socially equitable low carbon future.”
Aviva’s first Ltaf follows the launch of the Schroders Capital Climate+ LTAF, which was designed to support the net-zero transition for UK pensions fund investors.
The fund was launched as the UK’s first Ltaf after receiving approval from the Financial Conduct Authority in March.
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