23 May 2019
LGIM expands Multi-Index range with launch of new Future World funds
Legal & General Investment Management (LGIM) has expanded its Multi-Index range with the launch of two sustainable investment focused Future World funds for investors that seek diversification across asset classes while incorporating environmental, social and governance (ESG) considerations. This brings two of LGIM’s franchises together into a new product and builds on the success of the £3.2 billion Multi-Index range that combines, mainly, a mixture of index tracker funds with investments across company shares, bonds and commercial property.
The new Future World Multi-Index Funds*, aim to provide long-term investment growth within two pre-determined risk profiles, to suit clients’ risk and sustainability objectives. This results in exposure to a diversified range of asset classes such as equities, fixed income securities, money market instruments, and alternatives including property. The asset allocation will be managed on an active basis. The majority of each fund will be invested in assets that incorporate LGIM’s Future World principles or funds that clearly define a set of ESG criteria.
The Multi-Index team will take into consideration ESG factors as well as the risk and reward opportunities of the underlying asset classes. Sustainable investment also offers investors the chance to diversify away from risks to future returns such as poor company governance or excessive carbon emissions.
The newly created Future World ESG Index Funds are used as portfolio building blocks. These funds are tilted to reduce exposure to companies associated with poor ESG practices and provide greater exposure to those with better practices. In 2018, we assessed over 11,000 companies under LGIM’s ESG scoring methodology, and voted against 3,864 board directors globally on behalf of our clients. In addition, these underlying strategies incorporate LGIM’s Climate Impact Pledge, a targeted engagement process focused on the companies key to low-carbon transition. In addition, the Future World Protection List excludes from the funds those companies which we believe pose the greatest risk to future returns, including controversial weapons manufacturers, ‘pure’ coal manufacturers and violators of the UN Global Compact.
The launch of the new fund range follows client demand from both retail and institutional investors
*The funds have been launched as authorised unit trusts by Legal & General (Unit Trust Managers) Limited.
We’re seeing increased demand from investors for portfolios which are aligned to their values and can generate capital growth and income within their preferred risk parameters. The two new funds bring together our flagship Multi-Index and Future World ranges to fulfil this need, through combining our expertise of active asset allocation, risk targeted investing, and ESG integration.
Emiel van den Heiligenberg, Head of Asset Allocation at LGIM
Sustainable multi-asset investing shouldn’t have to cost the earth and using LGIM’s ESG index building blocks in portfolios can help increase cost effectiveness as well as mitigate future risk. Of course, our existing Multi-Index range already benefits from the Active Ownership* approach of our Corporate Governance team, but these funds will take our ESG integration further.
James Crossley, Head of UK Retail Sales at LGIM