UK real assets expected to offer best growth potential as economies reopen – Aviva Investors Real Assets House View 2022

(London) – UK real assets are expected to offer investors better growth prospects relative to continental Europe, according to the latest edition of the Real Assets House View by Aviva Investors, the global asset management business of Aviva plc (‘Aviva’).

The research also identifies long income and fixed-rate debt as strategies most likely to provide best risk-adjusted returns, particularly for those investors seeking investments with strong cashflow-generating characteristics.

The Real Assets House View brings together views and analysis from across the real estate, infrastructure and private debt investment teams, providing a foundation from which Aviva Investors can make relative-value investment decisions regarding multi-asset allocations, with clients increasingly allocating to Real Assets as part of an outcome-based approach.

Aviva Investors expects UK Real Assets to offer better growth potential than continental Europe, highlighting the broad reopening of the UK economy, stronger GDP prospects and supportive monetary policy lending itself to greater room for capital value growth. The asset manager also expects more flexibility in monetary policy to provide the UK with greater agility to react to the changing macro environment.

Daniel McHugh, CIO, Real Assets at Aviva Investors, said:

“Pricing in European markets is at all-time highs. As a result, we expect UK real estate to outperform on a five-year risk-adjusted basis, where better pricing means there is more room for yield compression as income streams strengthen. With UK monetary policy having been able to adapt quicker to the changing macro climate, we think the UK market to be more favourable to investors. That said, our central assumption for inflation is that there will be significant increases over the short term, making the cost of using traditional liquid markets to hedge inflation punitively high. The result has seen Real Assets increasingly appreciated as a more viable solution for inflation-hedging purposes.”

With a challenging macro environment set to continue as the backdrop for markets, Aviva Investors expects cashflow-generating strategies such as long income and fixed-rate private debt to prove attractive with investors looking for best risk-adjusted returns. As an asset class, fixed-rate debt has offered a 30-50 basis point premium over liquid bonds of similar creditworthiness, which Aviva Investors believes makes it a much more attractive option for institutional investors looking to match long-term liabilities.

Daniel McHugh added:

“Long income and private debt are two examples of Real Assets strategies which have the ability to deliver robust income streams, underpinned by consistent returns and lower volatility relative to other asset classes, despite the exceptional challenges presented by the pandemic over the last two years.  They have done so whilst continuing to offer an illiquidity premium relative to other asset classes. This is a further demonstration of the all-round qualities real assets can provide to a portfolio, including as part of credible return-seeking strategies.”

Aviva Investors also pointed out the impact that an intensifying race to net zero is having on Real Assets, with renewables and forestry as sectors experiencing strong investor demand as a result.

Daniel McHugh said:

“Renewables form a central pillar of the UK government’s net zero policy, and we think there is large amount of value yet to be discovered in the sector particularly as funding mechanisms and policy support for nascent technologies becomes clearer. The focus on net zero targets highlighted as part of our Real Assets Study in November reflects investor reaction to this, pushing up demand for suitable opportunities. This might cause future values to be squeezed, however many investors are likely to consider wider environmental factors, not only total returns, as they look to ensure progress towards longer-term sustainability targets. Whilst forestry is likely to prove popular as one of very few investment options that provides a carbon sink, it is vitally important that investors take the surrounding habitats and communities into account as part of those activities. Our expectation is that an increased intensity of focus on net zero will cause greater polarisation between winners and losers in the future of Real Assets.”

For more information contact:

James Morgan

Media Relations Manager

Steve Ainger

Head of Media Relations

Important information

The information and opinions contained in this document are for use by the financial press and media only. No reliance may be placed for any purpose on the information or opinions contained in this document nor should they be seen as advice. 

The press release is provided on the basis that Aviva Investors Global Services Limited is not causing the communication of a financial promotion under exemption of the Financial Promotion Order, as Aviva Investors Global Services Limited has no control over the way in which an article based on this press release is prepared and published by the financial press and media. 

Except where stated as otherwise, the source of all information is Aviva Investors Global Services Limited (“Aviva Investors”) as at 11 April 2022. Unless stated otherwise any views and opinions expressed are those of Aviva Investors. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature. The value of an investment and any income from it may go down as well as up and the investor may not get back the original amount invested. 

Issued by Aviva Investors Global Services Limited, registered in England No. 1151805. Registered Office: St Helen's, 1 Undershaft, London, EC3P 3DQ. Authorised and regulated by the Financial Conduct Authority.

Aviva Investors

Aviva Investors is the global asset management business of Aviva plc. The business delivers investment management solutions, services and client-driven performance to clients worldwide. Aviva Investors operates in 14 countries in Asia Pacific, Europe, North America and the United Kingdom with assets under management of £268 billion in assets under management as at 31 December 2021.

Aviva PLC

We are the UK’s leading Insurance, Wealth & Retirement business and we operate in the UK, Ireland and Canada. We also have international investments in Singapore, China and India.

  • We help our 18.5 million customers make the most out of life, plan for the future, and have the confidence that if things go wrong we’ll be there to put it right.
  • We have been taking care of people for 325 years, in line with our purpose of being ‘with you today, for a better tomorrow’. In 2021, we paid £30.2 billion in claims and benefits to our customers.
  • Aviva is a market leader in sustainability. In 2021, we announced our plan to become a Net Zero carbon emissions company by 2040, the first major insurance company in the world to do so. This plan means Net Zero carbon emissions from our investments by 2040; setting out a clear pathway to get there with a cut of 25% in the carbon intensity of our investments by 2025 and of 60% by 2030; and Net Zero carbon emissions from our own operations and supply chain by 2030.  Find out more about our climate goals at and our sustainability ambition and action at
  • Aviva is a Living Wage and Living Hours employer and provides market-leading benefits for our people, including flexible working, paid carers leave and equal parental leave. Find out more at
  • At 31 December 2021, total Group assets under management at Aviva Group are £401 billion and our Solvency II shareholder capital surplus is £13.1 billion. Our shares are listed on the London Stock Exchange and we are a member of the FTSE 100 index.
  • For more details on what we do, our business and how we help our customers, visit  
  • The Aviva newsroom at includes links to our spokespeople images, podcasts, research reports and our news release archive. Sign up to get the latest news from Aviva by email.
  • You can follow us on:

o    Twitter:  

o    LinkedIn:

o    Instagram:

For the latest corporate films from around our business, subscribe to our YouTube channel:

Aviva Investors Global Services Limited
St Helen's, 1 Undershaft, London, EC3P 3DQ

Phone     +44 (0)20 7809 6000

Fax          +44 (0)20 7489 7940



Issued by Aviva Investors Global Services Limited, registered in England No. 1151805. 
Registered Office: St Helen's, 1 Undershaft, London, EC3P 3DQ. Authorised and regulated by the Financial Conduct Authority and a member of the Investment Association.

Telephone calls may be recorded for training and monitoring purposes.