BlackRock has launched a fund targeting investments across the real assets sector for UK defined benefit pension schemes.
The investment manager said its UK Strategic Alternative Income Fund would target a net 5% annual return from infrastructure debt, renewable energy, real estate debt, long lease property and direct lending.
The semi-open-ended fund launch comes after BlackRock created a real assets group headed by Jim Barry to combine infrastructure and real estate.
Andrew Stephens, head of intermediated clients for the UK, said the country鈥檚 pension schemes were 鈥渋ncreasingly embracing less liquid strategies to enhance returns鈥� but that such investments 鈥渁re not often easy to exploit鈥�.
He added: 鈥淏y creating a single portfolio that provides exposure to a range of alternative income sources, we are helping schemes access these markets more easily, while also providing diversification.鈥�
The fund, which has a four-year lock-in, will invest in a mixture of funds, bespoke mandates and direct transactions.
Stephens said strong asset returns since 2009 鈥渉aven鈥檛 fed through鈥� to improved funding levels for defined benefit pension schemes.
鈥淔orward-looking returns from public markets alone won鈥檛 meet their objectives,鈥� he said.
鈥淲ith many schemes鈥� recovery plans being in excess of 10 years, the illiquidity premia that schemes can source from private markets are compelling, and UK pension schemes, with their long investment horizons, are ideally positioned to benefit.鈥�
