Aegon Asset Management is launching a property fund which aims to provide pension fund investors with attractive returns through the active management of a portfolio of direct UK property investments.
The Aegon Active Value Property Fund, managed by David Wise and Helen Batten, will target properties in the GBP3m to GBP10m size range, an area largely ignored by many funds, and look to build a balanced portfolio of property from across the UK.
The fund is targeted at investment professionals and is suitable for defined benefit and defined contribution pension schemes.
Aegon Asset Management believes income will be a major factor for property returns over the medium term and it believes that by combining income with its property team’s stock-picking and asset management skills, it will be able to produce attractive returns for longer term investors.
The fund will have no gearing, except in the short term for bridging sales or purchases and will not have any indirect holdings. It will have an initial projected yield of seven per cent, although all income derived from its investments will be reinvested.
The fund will aim to outperform the IPD/Association of Real Asset Funds All Balanced Funds Index, which includes many higher risk funds that utilise gearing and indirect property, by 0.5 per cent on a rolling three-year basis.
It will have a broad sector allocation, investing in the main commercial property areas of offices, industrial and retail, including high street and warehouse units. But it may also consider leisure, healthcare, residential and student accommodation.
Wise says: “We believe there is a gap in the market for our fund to gain a competitive edge by buying properties in the GBP3m-GBP10m size range, that are too big for private buyers but too small for most institutional investors.
“As a team, we have a very strong track record in finding and buying properties that are basically good quality although in potential need of refurbishment or repositioning in the market, and Helen and I will focus on finding these properties to maximise the potential return of the fund.”