The US-based asset management firm has established its first UCITS-compliant real estate debt fund.

Principal Global Investors has launched a real estate debt fund for European investors.

The Real Estate Debt Fund, which is Ireland-domiciled, will be co-managed by Marc Peterson, Jason Haigh and Scott Carson.

The majority of its assets will be invested in a variety of US commercial mortgage-backed securities, which are structured debt securities, typically secured by diversified pools of first mortgages on commercial properties across the US.

The fund may also invest in unsecured bonds issued by companies with a primary focus on real estate or real estate-related business.

“Real estate debt may be interesting to investors who want to diversify away from traditional fixed income as there could be a non-correlation advantage,” said Nick Lyster, global head of Principal’s wealth advisory services, adding: “This unique asset class appeals to institutional real estate investors and alternative fixed income investors looking to diversify credit exposure.”

The fund is registered for sale in the UK, Belgium, France, Finland, Germany, Guernsey, Ireland, Italy, Jersey, the Netherlands, Spain, Sweden, and Switzerland. It will also be registered in Singapore in the next few months.