Willis Towers Watson aims to target yield-seeking institutional investors through a fund designed to provide a “compelling alternative” to index-linked government bonds, the UK-based firm announced today.
The Secure Income Fund will look for investment opportunities in asset classes ranging from real estate and infrastructure to renewables and real asset debt. It will aim to use a variety of structures including co-investments and secondaries deals to produce inflation-linked cashflows that generate better risk-adjusted returns than investment-grade credit and index-linked gilts.
The fund is open-ended so does not have a target per se, but a spokesperson for Willis Towers Watson told Infrastructure Investor that the firm was expecting to see it grow to between £2 billion ($2.4 billion; €2.3 billion) and £3 billion. The company declined to comment on fees, simply stating that they are “low”.
“With many institutional investors continuing to prioritise inflation-linked income, the real yields available from traditional assets have been squeezed. Clients have been telling us about the challenges which they have faced in establishing a presence in the alternative area of secure income investments,” said Karen Dolenec, global head of real assets at Willis Towers Watson.
The firm has been investing in what it dubs secured income assets since 2006, so far through other structures than co-mingled pools. It targets long-term yields of 4-5 percent a year through the strategy, with 30 staff tasked with sourcing deals and identifying managers.
“The key benefit of the fund is that it offers a simple solution for individual clients to benefit from our sourcing skills in an attractive but difficult to access opportunity set,” Dolenec said.
The news comes just a few months after Dolenec was promoted from senior investment consultant to global head of real assets. She joined the advisory and investment firm in 2014 from London-based buyout house Terra Firma, where she was a founding member and managing director.
Willis Towers Watson manages over $87 billion of assets.