Aviva Investors Rolls Out Fund Targeting Alternative Investments

Harry Keir Hughes

21 February 2017

has launched a new fund that it says offers investors access to illiquid alternative credit strategies while maintaining a risk profile in line with medium credit quality.

The Aviva Investors Alternative Income Solutions Fund will maintain an overall risk profile in line with BBB-rated investment grade credit. It will be managed by Barry Fowler, managing director of alternative income solutions, alongside fund managers James Tarry, Ted Jennings and Craig Mackenzie, Aviva Investors said in a statement.

The fund, which has a multi-asset portfolio that invests in real estate finance, infrastructure debt, private corporate debt and structured finance, is denominated in British pounds and will invest in British pound, US dollar and euro assets to hedge overseas currency risk.

It will make regular income payments and reinvest capital subject to liquidity, Aviva Investors said.

The fund seeks relative value across the private asset market and will deliver a return of three months GBP LIBOR plus 200 basis points.

“In a low interest rate environment, institutional investors want high-quality cash flows to meet future liabilities with better returns than are available in publicly-traded markets, including government bonds,” said Fowler.

He added: “Alternative income assets have such characteristics, and typically demonstrate lower defaults and higher recovery rates relative to liquid comparables. The fund takes a multi-asset approach to provide access to a greater array of illiquid opportunities and to increase diversification benefits.”