Aviva is stepping up its investment in private markets with a new defined contribution (DC) default strategy targeting up to 25% in unlisted assets.
The new strategy, My Future Vision, will allocate 20% to 25% of its portfolio to global private markets, Aviva said in a press release, with the precise allocation depending on where a saver is on their journey to retirement.
The strategy will include private equity, infrastructure, real estate and private debt, with investments made through discrete allocations to a range of specialist private markets managers, including Invesco Real Estate, Apollo, KKR, StepStone, and Neuberger Berman.
Aviva said this would allow a more flexible approach to allocation, meaning the underlying private markets allocation can be tailored depending on the different risks members face.
Maiyuresh Rajah, director of investments at Aviva, said: “This new and innovative solution will invest in a wide range of private market investment strategies and will consider the evolving challenges savers encounter at different stages of their journey to retirement. My Future Vision is a major step forward for DC pension schemes when it comes to the scope and sophistication of private market investing.”
My Future Vision is currently available to Aviva’s trust-based schemes, but is expected to be rolled out more widely.
Andy Rofe, managing director and head of Europe for Invesco Real Estate, said: “As private markets become increasingly central to improving retirement outcomes, real estate – the largest asset class within private markets – remains underrepresented in many DC portfolios.
“This partnership reflects Invesco’s deep real estate expertise and our belief that DC stakeholders should benefit from the same opportunities as institutional investors, with solutions tailored to their specific needs.”
The launch of My Future Vision also supports Aviva’s pledge under the Mansion House Compact to allocate 5% of default investment strategies to unlisted equities by 2030. It is also a signatory to the Mansion House Accord, aiming to invest at least 10% of DC default funds in private markets by 2030, with half of this allocated to the UK.
Mark Versey, chief executive officer at Aviva Investors, said: “We believe [the strategy] will support increased investment in the UK, alongside better access to opportunities in global private markets, all whilst delivering long-term investment outcomes for millions of savers.”
In its push to consolidate DC pension schemes, the government wants default investment strategies to reach at least £25bn in total assets. Aviva’s existing default strategies, My Future Focus and My Future, already meet this threshold. A spokesperson for Aviva told Pensions Expert that the new strategy would “sit alongside our existing core default investment solutions to meet the differing needs of our customers and provide choice to employers”.
