Aviva Investors is planning to invest £10bn into UK infrastructure and real estate projects over the next three years.
It is also anticipating putting more than £3.5bn into UK structured finance and private corporate debt strategies.
The firm said this was due to pension funds and insurers wanting to continue to increase their allocations to such investments as interest rates remain low and the public markets endure ongoing “heightened volatility and squeezed yields”.
Nearly £6.5bn of the £10bn investment target will come from Aviva group companies, with the remaining amount expected to come from external client mandates.
“Aviva is investing in UK infrastructure and real estate to help our economy and communities bounce back,” said Aviva chief executive Amanda Blanc.
“We plan to invest in the UK’s regions and cities, in critical areas such as social housing, renewable energy and rail networks.
“The investments being made will ultimately fund people’s savings and retirement, aiming to deliver stable returns to our customers and funding a sustainable future for the UK.”
Mark Versey, chief investment officer, real assets at Aviva Investors, added: “Investors are recognising the enhanced yields they can get from holding real assets compared to the return on a comparable publicly listed security.
“Being backed by an asset with a tangible value means that they often carry much lower volatility too. The market uncertainty caused by Covid-19 should make the resilience of long-term cashflows offered by real assets increasingly appealing to institutional investors. With interest rates likely to remain lower for longer, we expect clients will continue to look towards the sector for risk diversification and returns.
He added: “Investing in real assets has an important social and economic benefit; funding everything from new offices and student accommodation to renewable energy facilities and rail infrastructure.
“They can also deliver better investment outcomes for employee pension schemes and insurers, while creating jobs in local communities. As a long-term investor, we recognise the impact we can have, from regeneration work in partnership with local authorities, through to creating renewable energy networks as part of the UK’s sustainable future. It’s important we better connect investors with the assets they own and demonstrate the value that their investments can have in local communities and society.”
Aviva Investors’ real assets diviosns has grown by 28% since its launch in May 2018 to total £47.3bn AUM.
