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Aberdeen Investments is seeking approval to combine two of its real estate funds to create a combined £700M global vehicle.
The move is part of the long-term trend of fund managers offering their investors larger vehicles. The hope is that bigger funds offer greater diversification, lower fees and thus better returns.
In this case, the manager wants to combine the Abrdn Real Estate Fund and the Abrdn Real Estate Feeder Fund with the Abrdn Global Real Estate Fund, creating a flagship global hybrid real estate fund.
The fund is a hybrid in that it will combine direct property investments with an allocation to global listed real estate shares. Most property funds either do one or the other. Having shares in the portfolio allows it to better manage liquidity, Aberdeen said.
The Abrdn Real Estate Fund is one of the few open-ended real estate funds in the UK open to retail investors that has not liquidated its assets in the past decade. It had £522M of assets at the end of June, according to its fact sheet, and of its direct holdings, 50% were in industrial, 29% in offices and 12% in retail, with the remainder a mix of alternative asset classes.
The Abrdn Global Real Estate Fund had £229M of assets at the end of June, with its largest holdings including an office in Jersey and industrial assets in the Netherlands and U.S.
“A larger, more diversified strategy would provide investors with access to a broader opportunity set across global property markets, while creating a more streamlined and scalable platform from which to target long-term growth and income,” Aberdeen Global Head of Real Estate Anne Breen said in a statement.
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