Asset Manager Overview
The asset management arm of L&G was established in 1970, when it started managing assets for pension funds, institutional and private clients. Today it manages assets over £1.1 trillion on behalf of a broad range of clients and across multiple asset classes including equity, fixed income, property and multi-asset. The large majority of its assets are managed on an index basis but it also manages active strategies.
Fund Manager/Team Overview
The lead manager for the fund is Andrzej Pioch. His focus is the management and development of retail and institutional multi-asset funds, including the Multi Index range. Prior to joining L&G in 2014, he spent 5 years at Aviva Investors in their multi-asset team. He is supported directly on these funds by co-manager Francis Chua who has been with the team since 2016. Head of the Multi Asset Funds team John Roe provides a sounding board for ideas, discussion, and oversight. This is in addition to inputs from the wider well-resourced Asset Allocation team.
Investment Philosophy & Process Overview
The L&G Multi Index fund range has been specifically created to meet the needs of clients wanting more control over the risk profile of their investments. The philosophy which underlies the range, is that consistency of performance can be achieved through an approach which blends team based decision making, cross discipline expertise and research based evidence. The team also believe that in order to maximise risk adjusted returns it is important to have a long term time horizon.
This fund is one of five low cost, multi asset, fettered fund of funds, that have been designed to map specifically to a Dynamic Planner (DP) risk profile. DP is a provider of financial planning technology and has created a set of risk profiles, ranging from 1 (lowest) to 10 (highest), that cater to a variety of client attitudes to risk. This fund maps specifically to risk profile 4 and is designed to be the second lowest risk within L&G's Multi Index range. DP also publish a set of model asset allocations that accompany the risk profiles however L&G believe that they can build more efficient portfolios, that provide a greater level of return for the stated level of risk, and so build their own. The multi-asset funds team works in conjunction with other teams in the wider group to build the fund's long-term asset allocation, which serves as the starting point for portfolio construction. Allocation at the 'core' asset class level is determined quantitatively, while the regional and sub-asset class breakdown is informed by more qualitative input. This asset allocation is reviewed at least annually, and the time horizon over which L&G makes its longer-term forecasts is 10 years or greater. The portfolios are constructed with a strong awareness of the risk of capital loss and an understanding that markets do not always behave as models predict.
Adjustments to the long term allocation are made on a shorter term basis (1-5 years) and are described as their 'dynamic asset allocation'. The Asset Allocation team are directly responsible for formulating the ideas which drive changes and the research behind this is broadly categorised into three areas; fundamental returns - what is the current market fair value; macro themes - what trends and themes are having the greatest influence on markets; tail risk events - unlikely events that may have a great impact on the performance of markets. The manager is then responsible for reflecting these views in the portfolio and weighting them according to conviction.
The fund operates as a fettered fund of funds and will principally invest into L&G group funds. It predominantly invests in index tracking funds. L&G take a common sense approach to index fund management described as 'pragmatic replication' and whilst they aim to hold every stock in an index this is not done at any cost. Actively managed funds from the group may also be held and this is most likely to be across property and fixed income asset classes.