Solving the property investment dilemma for DC schemes

01 February 2021

Craig Brown Institutional Distribution Director

Author

Craig Brown
Institutional Distribution Director

Craig Brown considers the advantages of property investment for DC pension schemes.

Property could be seen as the Cinderella option for defined contribution (DC) pension schemes. Trustees know property has historically delivered attractive returns – with the advantage of low correlation to other assets. But it can be an illiquid investment with high transaction costs. As with other asset classes there is also the risks associated with assets being concentrated with a single manager.

The result, according to Aegon Asset Management, is just one-third of DC pension schemes invest in commercial property, compared to two thirds of defined benefit (DB) schemes.

So, what if there was an approach which offered DC schemes a more diversified exposure to the institutional property market, with the potential for lower switching costs, straightforward governance, lower minimum investments and the potential for daily liquidity?

Well now there is. Mobius Life has partnered with Aegon Asset Management to launch the Aegon Active Beta DC Property Fund on the Mobius Life platform, making the fund available to DC schemes of all sizes.

The Aegon Active Beta Property Fund was launched in 2017 and introduced quasi-passive property investment to UK DB pension schemes. Demand from schemes and consultants for a DC version led Aegon to partner with Mobius Life to develop a version which would meet the requirements of the DC pensions market.

The Aegon Active Beta DC Property Fund aims to offer schemes long-term exposure to the UK property market with returns in line with an index of balanced funds.

This launch is yet another example of asset managers partnering with Mobius Life to make innovative investment strategies available to the wider pensions market. We life-wrap their funds on our platform to offer lower minimum investment limits, simplified governance, daily liquidity and lower costs. This can help schemes to adopt sophisticated investment strategies to meet their long-term funding requirements.

Recently we have also partnered with asset managers to launch funds making structured equity, multi asset, zero-fee true index and private assets as well as property available to a far wider range of pension schemes.

So, DC schemes, now you really can go to the ball!

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