Legal & General Investment Management (LGIM) has expanded its Multi-Index range with the launch of two sustainable investment focused Future World funds for investors that seek diversification across asset classes while incorporating environmental, social and governance (ESG) considerations.
This brings two of LGIM's franchises together into a new product and builds on the success of the £3.2 billion Multi-Index range that combines, mainly, a mixture of index tracker funds with investments across company shares, bonds and commercial property.
The new Future World Multi-Index funds, aim to provide long-term investment growth within two pre-determined risk profiles, to suit clients' risk and sustainability objectives. This results in exposure to a diversified range of asset classes such as equities, fixed income securities, money market instruments, and alternatives including property. The asset allocation will be managed on an active basis. The majority of each fund will be invested in assets that incorporate LGIM's Future World principles or funds that clearly define a set of ESG criteria.
The Multi-Index team will take into consideration ESG factors as well as the risk and reward opportunities of the underlying asset classes. Sustainable investment also offers investors the chance to diversify away from risks to future returns such as poor company governance or excessive carbon emissions.
The newly created Future World ESG Index funds are used as portfolio building blocks. These funds are tilted to reduce exposure to companies associated with poor ESG practices and provide greater exposure to those with better practices. In 2018, we assessed over 11,000 companies under LGIM's ESG scoring methodology, and voted against 3,864 board directors globally on behalf of our clients. In addition, these underlying strategies incorporate LGIM's Climate Impact Pledge, a targeted engagement process focused on the companies key to low-carbon transition. In addition, the Future World Protection List excludes from the funds those companies which we believe pose the greatest risk to future returns, including controversial weapons manufacturers, ‘pure' coal manufacturers and violators of the UN Global Compact.
The launch of the new fund range follows client demand from both retail and institutional investors.
This article was first published on InvestmentEurope, a sister title to International Investment