Aviva offers private debt access via open-ended fund

The firm is offering access to private debt, among other alternative credit asset classes, with a new open-ended fund product.

Aviva Investors has launched a fund offering institutional investors access to a variety of illiquid credit asset classes. The Aviva Investors Alternative Income Solutions Fund will invest in real estate finance, infrastructure debt, private corporate debt and structured finance.

According to a company announcement, the firm is targeting returns of three-month GBP LIBOR plus 200 basis points. Barry Fowler, James Tarry, Ted Jennings, and Craig Mackenzie will be managing the offering. 

The fund started accepting its first investor subscriptions in December, a spokesman for Aviva told PDI. The first investors' drawdown was in January. 

The fund will make investments in three currencies—sterling, US dollars and euros—and employ a hedging strategy to reduce currency risk. It is denominated in sterling.

Open-ended fixed-income alternative funds are hard to come by, particularly when they focus on illiquid assets, Jason Kephart, analyst at Morningstar, told PDI. “We see long/short credit [funds], but that’s mainly long or short interest rates,” he said, noting due to liquidity requirements it’s often difficult to invest in areas like distressed debt within an open-ended structure.

Aviva has had success with its multi-asset strategies to date. The firm launched its Aviva Investors Multi-Strategy Target Return Fund in 2014 in the UK. It has since amassed more than £3.2 billion in assets within this strategy, according to the fund’s online fact sheet.

Aviva also sub-advises multi-strategy funds for US-based investment firm Virtus Investment Partners. The Virtus Multi-Strategy Target Return Fund, launched in 2015 in the US, has collected $127.8 million since its inception.