Insights

LGIM is committed to achieving net-zero greenhouse gas emissions by 2050 across all assets under management.

As delegates gather at COP27, they confront the same long-term challenge posed by climate change as they did last year. But the context has changed dramatically: in light of the war in Ukraine, governments need to balance net-zero goals with a new imperative for energy security.

Rising interest rates have lowered future liabilities while decreasing LDI portfolio collateral levels. Here’s how schemes can seek to balance this scenario.

While consensus forecasts suggest further economic recovery in 2022, we remain prepared for bumps in the road.

Even though 2022 has begun with an abrupt change in the macro narrative, stoked by the Fed, we hold the line on our bullish outlook for risk assets.

In our 2022 Solutions Outlook, members of the team share their insights on what we believe to be some of the key themes for the year ahead. From CDI and credit markets to inflation, green gilts and equity protection strategies, we discuss some of the most important topics for DB pension schemes this year.

In this article, we look at the high Sharpe ratios, improvement in quality and low duration of global high yield corporate bonds and explain why we believe that this asset class could be a valuable addition to a DB pension scheme portfolio.

In fixed income markets, it’s usually when things begin to ‘feel’ better that you run into maximum optimism. But wouldn’t it be ironic if the long-awaited reopening of economies and societies turned out to be a difficult period for markets?

With record amounts of stimulus still gushing through global markets, and the economic cycle at a relatively early stage, we remain positive on risk assets.

In this outlook, teams from across LGIM examine the opportunities and risks with which investors are presented in this context.

The second annual results of our Climate Impact Pledge showcase the corporate leaders and laggards on climate action; we are encouraged by improvements across sectors but will continue to press companies to meet this era-defining challenge.

A once-fringe economic theory has been embraced by liberal politicians at the same time as traditional budget hawks have been in retreat. Its rise has potentially radical implications for inflation and investors.

Does a decarbonising world need atomic energy?

Four practical steps DB pension schemes can take to help them navigate volatile markets.

Running RPI-linked assets versus CPI-linked liabilities can pose material risks. But as pension schemes become better hedged – and market pricing becomes more appealing – they may seek to explore CPI-linked assets in greater detail.

What determines a city’s future success and how is this linked to property investment?

Battery costs have declined rapidly in recent years, but the market is likely too optimistic about both the timeline for lower battery costs and what happens when we get there.

The global risk asset rally continued in early 2017, with emerging market investments the star performers.

The American midterm elections are approaching and the crystal ball gazing has begun. Here’s what investors should consider regardless of whether the US votes for a ‘distilled Donald’, the ‘Democratic double’ or a ‘divided democracy’.

The economic expansion of the last decade has been a consistent tailwind for financial assets. We see next year as the start of the twilight zone between expansion and an eventual downturn that will likely mark the end of the cycle.

In our last quarterly outlook, we flagged our cautious posture on risk assets, taken due to a number of smouldering risks on the horizon. One risk we did not highlight, however, was that a pandemic would break out, causing untold human suffering and economic damage.

What should investors make of rising yields, higher volatility and wider credit spreads?

A brief discussion of some of the behavioural biases that can explain factor premia.

Can cyclical tailwinds paper over the structural cracks? And what’s the outlook for global trade, China and equity investors?

Companies that have seen their share price depreciate sharply in the face of self-inflicted wounds, structural challenges, or cyclical headwinds, represent potential ‘turnaround stories’. In this article we look at the attraction of investing in these businesses, and evaluate the risks or opportunities they present.

We expect another strong year for growth with the global economy firing on almost all cylinders. But the market has priced in this optimism, implying greater vulnerability for disappointment. We expect the low interest rate environment to continue into 2018. While interest rates can drift up, we do not think this is the beginning of the end for the bond markets.

The consequences of monetary tightening will define the 2018 investment landscape.

A weak pound and rising inflation, set against a tight labour market and loose credit conditions, should keep the UK out of recession.

The retirement of baby boomers is having a negative impact on economic growth. This is bad news for the return on risky assets and applies downward pressure on interest rates.

Peak oil demand is a contentious topic. It is crucial for climate change, yet there are possible negative downsides such as volatile oil equity prices and corporate bond defaults.

Driven by positive demographic trends, Asia has been a critical engine of the global economy, contributing around 30% of world GDP growth since 1980.

What is a fallen angel? In theological terms, a fallen angel is one who has rebelled and been exiled from heaven.

Investors currently buying UK government bonds are doing so in the knowledge that they are accepting a yield which is lower than the rate of inflation, i.e. the real yield.

It’s tempting to think otherwise, but not all emerging market debt is created equal. In this piece we examine the public, private and external debt profiles of individual emerging markets.

Our forecast of a long-term structural shift away from coal could have dramatic implications for investors.

The logistics industry is seeing increased investment, driven by technology trends including automation and smart manufacturing.