Aviva converts climate strategy to LTAF
Aviva Investors has unveiled its second long-term asset fund (LTAF) with a real assets strategy focused on the climate transition.
The asset manager has converted its Climate Transition Real Assets Fund, launched in 2021, to an LTAF in an effort to enhance investment efficiency in long-term assets.
It is the second LTAF run by Aviva Investors after it launched the Real Estate Active LTAF last year.
The climate-focused LTAF invests in transition-related solutions across European real assets markets, targeting opportunities in real estate, infrastructure, and nature-based solutions aligned with the transition to a low-carbon economy.
The fund targets an annualized return of 8% on a five-year rolling basis, according to Aviva Investors’ website. It invests in assets across Europe, with a target allocation of 60% to the UK.
Recent research published by Aviva Investors found that 69% of corporate defined contribution (DC) pension funds anticipated increasing allocations to real assets over the next two years, with sustainability-related factors increasingly influencing investment decisions.
Daniel McHugh, chief investment officer at Aviva Investors, said: “Our research shows investors are looking for access to investments that deliver long-term performance whilst being aligned with net zero commitments.
“By converting our Climate Transition Real Assets Fund to an LTAF structure, we believe we have a product that is market-leading in both those areas, providing opportunities to invest in exciting growth sectors which support the UK economy and its transition towards net zero, while maximising the investment outcomes of people saving for retirement.”
Yesterday (19 March), the HSBC Bank (UK) Pension Scheme announced a partnership with Fulcrum Asset Management to invest in a new LTAF targeting private markets investments.
LTAFs are also seen as an important aspect of chancellor Jeremy Hunt’s plans to encourage more pension schemes – particularly DC funds – to invest in UK assets.