23 January 2018

LGIM launches a Future World fund for UK retail investors

L&G Future World Equity Factors Index Fund seeks to address climate change risks today to protect investments in the future in an innovative investment fund.

Legal & General Investment Management (LGIM) has launched a unit trust version of its Future World Fund. The L&G Future World Equity Factors Index Fund mirrors the Future World Fund launched in November 20161 for institutional DB and DC investors. The Fund is managed by LGIM’s experienced Index team, who currently manage over £300bn* in assets, making LGIM one of the largest global providers of index funds.

The Fund aims to provide both capital and income growth by tracking the performance of the FTSE All-World ex CW Climate Balanced Factor Index.

The fund incorporates a ‘climate tilt’ allowing it to reduce exposure to companies with worse-than-average carbon emissions and exposure to fossil fuels, whilst increasing exposure to companies that seek to generate revenue from low-carbon assets.

It targets better risk-adjusted equity returns than a traditional index strategy by including investment ’factors’ – characteristics of assets that help explain their risk and return, being  value, low volatility, quality and size , in the design of its benchmark index.

Anton Eser, CIO at LGIM, commented, “We are on the path to a low-carbon economy and companies that fail to respond to this reality present a risk to investors’ portfolios. This Fund not only aims to help investors navigate these long-term risks, but also provides the opportunity to take advantage of the benefits yielded by the transition.”

Honor Solomon, Head of Retail at LGIM continued, “We have created the Fund to respond to our clients’ concerns about the risks associated with climate change and the demand we have seen from retail investors for funds which incorporate Environmental and Social Governance (ESG) considerations. The Fund retains the transparency and cost effective characteristics of a conventional index fund, but also gives investors greater exposure to companies that are likely to benefit from the transition to a low-carbon economy. We strongly believe that companies who behave more responsibly with respect to climate make better investments in the medium to long term.”

Driving long term change

The Fund incorporates LGIM’s Climate Impact Pledge, in which it commits to engage with the world’s largest companies that will need to adapt their business models and drive innovation in order to meet global climate change goals.

LGIM has identified the largest companies in six key sectors2 that are critical to the shift to a low-carbon economy and ranks them against criteria such as commitment to the low-carbon transition, board composition, strategy and transparency. LGIM engages with them to improve their ranking and help them strive to be the best in their sectors.

Companies that consistently fail to meet the minimum expectations will eventually be excluded from the fund if proactive engagement does not bring about positive change. This approach is a powerful tool to drive better company behaviour and raise standards across the market.

ENDS

Further information

Nicolette Botbol
Media Relations Manager
0203 124 4355
[email protected]
www.lgim.com

Michelle MacMillan
Senior PR Consultant
0203 124 4895
[email protected]
www.lgim.com

Notes to editors

Legal & General Investment Management

Legal & General Investment Management (LGIM) is one of the UK’s largest asset managers and a major global investor, with total assets under management of £951.1 billion*. We work with a wide range of global clients, including pension schemes, sovereign wealth funds, fund distributors and retail investors.

Throughout the past 40 years we have built our business through understanding what matters most to our clients and transforming this insight into valuable, accessible investment products and solutions. We provide investment expertise across the full spectrum of asset classes including fixed income, equities, commercial property and cash. Our capabilities range from index-tracking and active strategies to liquidity management and liability-based risk

The value of investments is not guaranteed and can fall as well as rise.

*LGIM internal data as at 30 September 2017, including derivative positions and advisory assets. These figures include assets managed by LGIMA, an SEC Registered Investment Advisor.

[1] https://www.legalandgeneralgroup.com/media-centre/press-releases/archive?id=50172

2 The sectors are oil and gas, mining, utilities, automobiles, financials (banks and insurance companies) and food retailers/producers.

Full details on the L&G Future World Equity Factors Index Fund can be found here http://www.lgim.com/uk/ad/funds/future-world-equity-factors-index-fund/accumulation/class-i.html