Legal & General Investment Management (LGIM) has expanded its factor-based investment offering with the launch of a multi-factor global equity fund, which has initial investment from Boots Pension Scheme.
Factor-based investing seeks to identify and harness underlying drivers of performance – or factors – in order to meet specific investment objectives. The LGIM Diversified Multi-Factor Equity Fund (‘the Fund’) invests in a diversified portfolio of global equities that exhibit ’factor’ characteristics1, while aiming to reduce risk relative to the global equity market by diversifying more effectively across regions and reducing stock-specific concentration. It is launched as a pooled vehicle for UK institutional clients.
Adam Willis, Head of Index & Multi-Asset Distribution at LGIM, said: “Investors are increasingly looking for alternatives to traditional market cap and multi-asset products. Factor-based investing is growing in popularity as it can be used to meet different investment objectives in a cost-efficient manner.
“We have delivered client-focused factor-based strategies for over ten years, working closely with our clients to create pioneering solutions such as the L&G Future World Fund launched last year. We are excited to continue to develop our offering into multi-factor solutions on behalf of schemes such as Boots.”
LGIM has developed the Fund in partnership with Scientific Beta, the provider of factor-based indices established by EDHEC-Risk Institute. The Fund uses Scientific Beta’s recently launched High Factor Exposure Indices as building blocks for the portfolio. LGIM has customised the building blocks to target a balanced factor exposure while enhancing diversification and reducing risk by controlling region and currency exposures.
The Fund will be managed by Multi-Asset Fund Manager Andrzej Pioch alongside LGIM’s broader Asset Allocation team, which currently manages over £37bn.
Noël Amenc, CEO at Scientific Beta, said: “Our philosophy combines controlled risk exposure, diversification of specific risk and robustness at all stages of index design. LGIM’s Asset Allocation team and Scientific Beta share a view on the most efficient implementation of a strategic multi-factor fund; this, combined with our academic research into the merits of factors, make us an aligned and informed partner for LGIM.”
LGIM manages £35bn in factor-based strategies and alternatively weighted indices2. In November last year, LGIM launched the L&G Future World Fund, a multi-factor global equities index fund that incorporates a climate ‘tilt’ to address the investment risks associated with climate change. The fund was selected as HSBC Bank UK Pension Scheme’s equity default option within its defined contribution scheme.