Multi-assetSep 24 2014

Review: LGIM multi-asset

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by

Legal & General Investment Management (LGIM) has launched the Retirement Income Multi-Asset fund in an attempt to target those looking to draw down an income from their retirement pot.

The group believes the fund is designed to access a diverse range of asset classes and regions, with asset allocation adjusted to take account of a changing market environment. It says it reflects the growing demand from investors for more choice about what they wish to do with their pension pot.

It will be managed by LGIM’s asset allocation team, with Martin Dietz heading the fund. Aiming to provide long-term growth up to and during retirement, it aims to facilitate the drawdown of retirement income while targeting a return of the Bank of England base rate plus 3.5 per cent over a full market cycle.

Its cycle will be between five and seven years. It differs from many multi-asset funds which have a lower target return, and its ongoing risk aim is below the typical 50 per cent equity risk.

It will focus on cashflow management and will aim to have holdings in investment-grade credit, nominal and inflation-linked bonds, and for the longer-term, allocation in equities and alternatives.

The fund has no minimum investment, but carries an annual management fee of 35bps and an additional total expense ratio of between 1 and 2 bps.

www.lgim.com

Comment:

This year’s Budget revelations came as a surprise, particularly to retirement providers.

But while many have seemed to release some form of annuity or drawdown product, LGIM have bucked the trend and released a multi-asset fund suitable for retirees.

Multi-asset funds in particular have seen a huge wave of popularity over the past few years, and this particular fund may be no different.

Investors relying on income drawdown in retirement need reliable long-term asset returns, and the group says this is exactly what the fund is designed for. The fund is also cost-effective as it is set to be implemented through LGIM’s index funds that cover a wide range of indices globally, and will have selective use of its actively managed funds.

The idea of this fund is that having both near-term and longer-term investments as well as a low-risk target will help people use drawdown and to not worry about changing their portfolios.

The use of both active and passive funds can provide some stability, which is exactly what clients will be looking for in retirement. This launch could signal a trend that we may see more of in the lead up to April 2015.