• Home
  • News
    • People moves
    • Africa
    • Asia
    • Australia
    • Canada
    • Caribbean
    • Domicile
    • Europe
    • Latin America
    • North America
    • Middle East
    • US
    • US
    • UK
  • Products
    • Funds
    • Pensions
    • Platforms
    • Insurance
    • Investments
    • Private Banking
    • Citizenship
    • Taxation
  • Fintech
  • Regulation
  • ESG
  • Expats
  • In Depth
  • Special Reports
  • Directory
  • Video
  • Advertise with us
  • Directory
  • Events
  • European Fund Selector
  • Newsletters
  • Follow us
    • Twitter
    • LinkedIn
    • Newsletters
  • Advertise with us
  • Directory
  • Events
    • Upcoming events
      View all events
  • European Fund Selector
International Investment
International Investment

Sponsored by

Sharing Alpha
  • Home
  • News
  • Products
  • Fintech
  • Regulation
  • ESG
  • Expats
  • In Depth
  • Special Reports
  • Video
  • ESG

LGIM launches ESG-focused fixed income ETF range

LGIM launches ESG-focused fixed income ETF range
  • Christopher Copper-Ind
  • @intlinvestment
  • 09 December 2020
  • Tweet  
  • Facebook  
  • LinkedIn  
  • Send to  

Legal & General Investment Management (LGIM) today announced the launch of its Core Fixed Income Exchange Traded Fund (ETF) range designed for UK and European wholesale and institutional investors.

Encompassing five funds, the range addresses investors' increasing need to gain exposure to core fixed income assets with ESG and liquidity considerations integrated into the investment design. Across the range, LGIM draws on expertise from its active and index fixed income teams, which collectively manage $236 billion in assets, to add value that can be lost in index investing for the benefit of investors.

Related articles

  • Invesco unveils first sterling corporate bond ESG ETF
  • Tabula launches world's first Paris-aligned fixed-income ETF
  • LGIM focuses on AI, health and water with three ETF launch
  • LGIM two sustainable ETFs trade on Deutsche Börse

All five core fixed income ETFs will be listed on the London Stock Exchange (LSE) with the L&G ESG Emerging Markets Government Bond UCITS ETF and the L&G ESG China Bond UCITS ETF also listing on the Deutsche Börse and the Borsa Italiana.

Liquidity and ESG integration in bond investing are among the top considerations for fixed income investors."

The ETFs provide a higher allocation to green bonds and issuers with the highest ESG scores than traditional fixed income ETFs, while retaining a similar risk/return profile to traditional indices.

The range also excludes the bottom quintile of issuers based on their ESG scores, as well as certain industries such as controversial weapons manufacturers, thermal coal miners, tobacco companies, oil sands (from 29 January 2021) and the violators of the UN Global Compact.

LGIM has designed for the index to employ a liquidity-aware approach, which includes increased minimum issuance thresholds relative to traditional benchmarks to improve the overall liquidity profile. The indices are specially optimised for liquidity, balancing portfolio and individual bond liquidity against potential performance trade-offs.

By leveraging on LGIM's fixed income index experience, the investment strategy of the ETFs transparently addresses the inefficiencies commonly found in index investing. These indices have been designed to avoid crowded trades and to put cash to work more efficiently. 

Accordingly, investors in these ETFs have the potential to benefit from the price reversion that can be captured by avoiding crowded bond selling activity- these ETFs can remain invested in "fallen angels" for up to six months after downgrade as well as remain invested in bonds closer to maturity. They will reinvest cash generated from coupons immediately rather than, as commonly found in traditional bond indices, holding onto cash until the end of the month.

In order to execute on these design requirements, LGIM sought to work with an index partner that has a strong track record in managing bond indices as well as a robust process for ESG integration.  Partnering with JPMorgan, the ETF range will leverage its ESG approach that incorporates well-recognised external ESG data and exclusions often required by responsibly-minded investors and asset managers.

Commenting on the launch, Howie Li, head of ETFs at LGIM, said: "Liquidity and ESG integration in bond investing are among the top considerations for fixed income investors. Our client feedback has been clear that the ETF industry needs to provide fixed income tools that better reflect the forward-looking investment landscape.

"In a single transaction, investors can now access the diversified bond portfolios in these ETFs to make strategic and tactical asset allocation decisions that address their ESG needs and liquidity concerns whilst maximising the potential value of thoughtfully designed indices that incorporates LGIM's index experience."

Commenting on the search for an index partner to incorporate LGIM's requirements, Lee Collins, head of Index Fixed Income at LGIM, said: "We are excited to partner with JPMorgan on the index design for LGIM's first fixed income ETFs and to see the many months of dedicated effort come to fruition with the launch of these products." 

"It was important to us that we could incorporate some of our pragmatic portfolio management techniques into the index design itself, thereby allowing us to take full advantage of opportunities to create real value for investors."

The launch of the Core Fixed Income ETF range brings LGIM's total ETF range to 33 funds, across its core and thematic suite, with total AuM of $7.5bn.

Subscribe to International Investment's free daily newsletter

  • Tweet  
  • Facebook  
  • LinkedIn  
  • Send to  
  • Topics
  • ESG
  • LGIM
  • Legal & General Investment Management

More on ESG

Tabula launches world's first Paris-aligned fixed-income ETF

  • ESG
  • 15 January 2021
RWC's Champion to join Premier Miton's European team as it plans ESG fund launch

  • ESG
  • 14 January 2021
Respondents noted that companies' attitudes towards mental health, social and environmental issues were 'not important'
70% of UK financial services professionals 'not confident' firm conducts ethical finance

  • ESG
  • 14 January 2021
Mirabaud AM granted SRI label for its global equity strategies

  • ESG
  • 14 January 2021
DeVere Group to offer free ESG advice to clients

  • ESG
  • 12 January 2021
Back to Top

Most read

FCA issues warning on cyrptocurrencies as Bitcoin volatility continues
FCA issues warning on cyrptocurrencies as Bitcoin volatility continues
DeVere launches equity fund with Columbia Threadneedle Investments
DeVere launches equity fund with Columbia Threadneedle Investments
Guardian WM is reborn as Skybound WM
Guardian WM is reborn as Skybound WM
HNWIs in SE Asia cite lack of financial knowledge as greatest concern: report
HNWIs in SE Asia cite lack of financial knowledge as greatest concern: report
People moves: IQ-EQ, AllianceBernstein, Beaufort Group, BCS Global Markets, Tyndall IM, TMF Group
People moves: IQ-EQ, AllianceBernstein, Beaufort Group, BCS Global Markets, Tyndall IM, TMF Group
  • Contact Us
  • Marketing solutions
  • About Incisive Media
  • Terms and conditions
  • Policies
  • Careers
  • Twitter
  • LinkedIn
  • Newsletters

© Incisive Business Media (IP) Limited, Published by Incisive Business Media Limited, New London House, 172 Drury Lane, London WC2B 5QR, registered in England and Wales with company registration numbers 09177174 & 09178013

Digital publisher of the year
Digital publisher of the year 2010, 2013, 2016 & 2017
Loading