2 Jun 2021
LGIM and Universal Investment partner to launch an Absolute Return Emerging Market Debt fund for German investors
Legal & General Investment Management (LGIM) and Universal Investment (UI) have today announced the launch of the UI LGIM Emerging Market Debt Absolute Return Bond Fund.
This represents the start of a strategic partnership between the two firms in the German-speaking (DACH) region. The Fund is available to institutional and semi-institutional investors in the DACH region.
The Fund is actively managed by LGIM’s Emerging Market Debt investment team, who have on average 16 year’s experience in the sector and manage €2.7bn in active Emerging Market strategies (as of the end of April 2021). This high-conviction fund will typically have between 50 and 100 holdings, an average credit rating ranging from BB to BBB and a duration between 2.5 and 4.5 years. This new fund is based on the firm’s current Emerging Market Absolute Return strategy, which has achieved positive alpha in over 80% of months since inception (March 2015).
By actively integrating ESG considerations at both country and company levels, the new proposition is designed for investors seeking stable, consistent returns over a medium-term time horizon, across all market conditions. The positioning of the Fund means that investors can target attractive returns in an otherwise low yield environment with low duration risk.
The Fund seeks to achieve its target return objective 3-month USD LIBOR + 300bps over rolling three-year periods by investing actively across the full emerging-market debt universe. The fund is focused on total returns, building an asymmetric risk profile, and managing downside risks. It is also able to invest in credit default swaps to minimise volatility.
The Fund is a Luxembourg SICAV and is registered for distribution in Germany, to begin with. It will also be registered in Austria and Switzerland. It will be offered to investors in a range of share classes including EUR hedged, unhedged EUR, distribution and accumulation share classes.
LGIM has a strong expertise in responsible investing and takes its investment stewardship obligation seriously. As well as assessing over 16,000 companies under its ESG scoring methodology, LGIM has recently been recognised for being a top supporter of ‘climate-critical’ shareholder resolutions in 2020 compared to the world’s 12 largest asset managers1. In 2020, independent NGO ShareAction ranked LGIM #1 among asset managers for its approach to climate change2. The firm was also selected by the UN Principles for Responsible Investment in October as part of its ‘leaders group’ on climate change3.
1 Majority Action, Climate in the Boardoom, How Asset com/
We are excited to have joined forces with Universal Investment by bringing this strong proposition to the German-speaking market.
As the largest European institutional asset manager,this is a key partnership for us and is part of our growth plans in the region and the wider Continent. LGIM will leverage its Emerging Market Debt expertise, and long-standing ESG credentials, to combine with Universal Investment’s unparalled distribution network in German-speaking countries.
Volker Kurr, Head of Europe, Institutional, Legal & General Investment Management (LGIM)
This Fund can generate alpha returns in rising and falling market conditions thanks to a top-down macro-economic approach. The strategy invests across all asset classes within the emerging-market debt spectrum, while offering downside protection. Through its ability to invest actively across the broad investment universe, the fund can be positioned to aim to achieve better risk-adjusted returns than benchmark-constrained peers.
Katja Mueller, Chief Customer Officer, Universal Investment
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