London Stock Exchange welcomes Legal & General Investment Management Celebrating the launch of six new core equity ETFs
London Stock Exchange welcomed Legal & General Investment Management (LGIM) for the launch of six new core equity exchange traded funds (ETFs). In response to the evolving index investment landscape and changing investor expectations, LGIM designed these funds so as to better avoid the crowding risks associated with indexing. The funds also raise the bar for the market by only including the companies that meet minimum business practices.
LGIM has redefined core equity market-cap ETFs through a new index design that can help shield investors from unpredictable behaviour of crowded trading that is experienced by equity indices commonly tracked by the most core ETFs. LGIM's new core equity range will ensure investors are not forced to turn over their portfolio at the same time as the vast majority of core equity ETFs in the market where short-term price volatility frequently occurs. The risk from this volatility is increasing with the rise of index investing, which LGIM believes highlights the need for change.
Howie Li, Head of ETFs commented:
"It’s right to expect more than just low-cost from core equity ETFs. Index managers need to be more active in mitigating the risks of crowded indices and engaging with companies for the long-term benefit of the market and investors. We have designed our range of core ETFs with these principles in mind, taking steps to promote long-term performance and stability."
LGIM's core equity ETFs will also ensure companies in the portfolio meet minimum standards for best business practices in order to mitigate risks that may affect long-term investment performance. Unique to any core range on the market, LGIM's Future World Protection List is integrated into the design, shielding investors from the negative future outlook associated with controversial weapons manufacturers, pure coal companies and consistent violators of the UN Global Compact. As part of LGIM's management of over £984.8 billion1 of assets, the core ETF range, as with all of LGIM’s funds, are subject to the active scrutiny of LGIM’s corporate governance team who engage with companies to create sustainable long-term value for investors.
LGIM has partnered with index provider Solactive, an established index provider with over a decade of operational track record and $200 billion+ invested into its indices, who will manage and calculate the indices designed and used by LGIM's core equity ETFs.
Simon Hynes, Head of Retail Distribution, EMEA, said:
"Our core equity ETFs can be used on their own or in conjunction with investors' existing building blocks to help diversify issuer concentration risk. We believe our core range will be of interest to our clients due to the low cost and additional value they deliver compared to what’s currently available in the market."
1LGIM internal data as at 31 June 2018. These figures include assets managed by LGIMA, an SEC Registered Investment Advisor. Data includes derivative positions.