LGIM launches Secure Income Assets Fund for professional UK Defined Benefit pension schemes
Legal & General Investment Management (LGIM) has launched a range of Secure Income Asset Solutions for investors seeking income over the longer term.
The Legal & General Secure Income Assets Fund has an open-ended pooled structure subject to a lock-in period. The fund is designed for professional UK defined benefit pension schemes looking for stable, long-term cashflows by targeting return of gilts +2.5 per cent per annum over a rolling three-year period, from a diversified portfolio of secure income assets, including infrastructure debt, real estate debt and private corporate debt.
For those UK pension schemes seeking a more bespoke solution, five single strategies have also been launched as separate unit-linked life funds:
- Legal & General Senior Real Estate Debt Fund
- Legal & General Investment Grade Infrastructure Debt Fund
- Legal & General Investment Grade Private Corporate Debt Fund
- Legal & General Sub-Investment Grade Infrastructure Debt Fund
- Legal & General Sub-Investment Grade Private Corporate Debt Fund
All the funds within the Secure Income Asset Solutions range have an open-ended pooled structure subject to a lock-in period, which enables clients to invest in secure income assets without facing any additional governance burden. This is particularly relevant for smaller schemes that may find such asset classes ordinarily out of reach due to the higher minimum investment and governance required. The flexibility of the offering means it can be adapted to suit clients’ liability hedging, cashflow matching and liquidity purposes.
Through its Real Assets platform, LGIM is one of the UK’s largest real assets managers, actively investing in, and managing, assets across commercial, operational and residential property sectors, as well as infrastructure, real estate, corporate and alternative debt.
With more than GBP35.1 billion of assets under management, LGIM Real Assets has built and retained a track record of out-performance, seeking to protect the medium to long term value of its portfolio, with green principles embedded into every property and investment decision.
Mark Johnson, head of UK Institutional Clients at LGIM, said: “The launch of the Secure Income Assets Fund meets the growing demand from our UK DB scheme clients for innovative solutions that deliver reliable income. Investing long-term capital in secure income assets offers a compelling opportunity to generate these cashflows with attractive risk-adjusted returns and the potential for long term owners of capital – insurers and pension schemes – to effect real and lasting change.”
Stuart Hitchcock, head of Portfolio Management, Private Credit, at LGIM Real Assets, said: “For investors with a long term view, secure income assets are a core part of a cashflow-driven investment strategy, delivering a breadth and depth of universe not available in the public market. By negotiating better structural protections than public market equivalents, we aim to provide improved downside protection, reduced valuation volatility and lower correlation with traditional traded assets.”
“With GBP14 billion AUM, our Private Credit business has seen considerable success across corporate, infrastructure and real estate debt. We have invested in some of the UK’s largest economic and social infrastructure, alongside renewable projects and real estate - our focus is to deliver significant financing to both the public and private sector, in order to serve our investment clients’ cash flow needs, while making a positive social impact.”