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.
2 Jun 2021
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 change. The firm was also selected by the UN Principles for Responsible Investment in October as part of its ‘leaders group’ on climate change2.
Volker Kurr, Head of Europe, Institutional, Legal & General Investment Management (LGIM): "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."
James Crossley, Head of UK Retail Sales at 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."
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with over £1.2 trillion in total assets under management* of which 39% is international. We have a unique and highly synergistic business model, which continues to drive strong returns. Legal & General provides powerful asset origination and management capabilities directly to clients, which also underpin our leading retirement and protection solutions. We are a leading international player in Pension Risk Transfer, in UK and US life insurance, and in UK workplace pensions and retirement income. Our purpose is to improve the lives of our customers and create value for our shareholders. Through inclusive capitalism, we are investing in long-term assets, such as real estate and infrastructure, that can help build a better society for the future.
Legal & General Investment Management
LGIM is one of Europe’s largest asset managers and a major global investor, with total assets under management of £1.16 trillion1 ($1.47tn, €1.35tn, CHF 1.31tn). We work with a wide range of global clients, including pension schemes, sovereign wealth funds, fund distributors and retail investors.
For more than 50 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 management solutions.
1 Data as at 30 June 2023. Data combines assets under management by LGIM in the UK, LGIMA in the US and LGIM Asia in Hong Kong.
Assets under management include securities and derivatives positions
*as at HY 2023