Legal & General Investment Management has launched its multi-index income range, consisting of three risk-targeted multi-asset funds designed to generate income while maintaining appropriate levels of risk for advisers and their clients over time.
The new range builds on the success of LGIM’s risk-targeted Multi-Index Fund range, which recently surpassed £600m in assets under management. The Legal & General Multi-Index range launched two years ago to provide advisers with a cost-effective investment solution that allowed them to easily match their clients’ risk profiles.
The L&G Multi-Index Income 4, 5 and 6 Funds are also risk-targeted, to maintain their risk rating and suitability for investors over time, however they aim to produce a greater proportion of total return from income, in comparison to the original L&G Multi-Index range. Income will be distributed on a monthly basis in the income class; an accumulation class is also available.
The lowest risk profile fund, Multi-Index Income 4 Fund, will look to produce a greater proportion of its income from sources such as fixed income, whereas the higher risk profile funds, Multi-Index Income 5 and 6 Funds, will generate a greater proportion of their income from equities. Generating income through dividends can be less stable but have greater potential for income and capital to grow over time.
To be cost-effective, the L&G Multi-Index Income Funds will gain exposure to markets primarily through L&G’s index tracking funds, alongside some investment in L&G’s active funds and external income-focused exchange traded fund’s used to bias the total return towards income.
The L&G Multi-Index Income Fund range will be managed by the same team as the L&G Multi-Index range, with lead fund managers being Justin Onuekwusi and Andrzej Pioch, working alongside co-managers Bruce White and Martin Dietz.
The L&G Multi-Index 4, 5 and 6 Funds have returned 11.52 per cent, 10.82 per cent and 9.44 per cent respectively between launch on 21 August 2013 and 30 September 2015.
Provider view
Justin Onuekwusi, lead fund manager at the L&G Multi-Index Income Fund range said: “In this low-interest rate world, the industry has seen increasing demand for multi-asset income funds targeting high-yield levels. However, there are clear dangers that come with chasing income. It may not be sustainable or may force a change in a fund’s risk profile in order to meet yield targets. Advisers are looking for greater certainty of risk over time on behalf of their clients, as the success of our Multi-Index range has proved.
Adviser view
Mel Kenny, chartered financial planner and director at London-based Radcliffe & Newlands said: “Multi-asset funds enable the fund manager to switch exposure to assets that could produce, in this case, the income that they desire within a specified range of risk or target of return. They give the smaller investor the reassurance that a range of assets are being utilised in order to give a return or exposure of volatility commensurate to the level of risk they are happy to take.
Charges
Ongoing charges of 0.36 per cent to 0.39 per cent.
Verdict
Multi-asset has been all the rage for several years, especially since the RDR. With the onset of pension freedoms, they have been suggested as one option that pensioners might investigate. L&G is one of the biggest fund managers with a good track record. Probably worth a look.
