L&G have announced the launch of three new factor-based index funds, bolstering its proposition for UK wholesale investors.
The L&G Developed World Single Factor Designed range consists of three funds: the L&G Developed World Momentum Factor Index Fund, the L&G Developed World Quality Factor Index Fund and the L&G Developed World Value Factor Index Fund.
While established amongst institutional investors, factor investing is less present in the wholesale market due to the more common use of traditional active products. These funds have been designed with evolving client needs in mind. They will enable investors to access specific ‘factor’ exposure across developed market equities. To provide this exposure, L&G has carried out extensive research to develop proprietary factor scores across value, quality and momentum that are integrated into customised iSTOXX indices.
- The L&G Developed World Momentum Factor Index Fund tracks the iSTOXX L&G Developed World Momentum Index NTR and aims to deliver exposure to companies that have shown strong recent performance or rapid growth in a short period
- The L&G Developed World Quality Factor Index Fund tracks the iSTOXX L&G Developed World Quality Index NTR and seeks exposure to companies with characteristics such as positive income, high profitability and low leverage, generally indicating lower financial risk, more stable earnings, and durable business models.
- The L&G Developed World Value Factor Index Fund tracks the iSTOXX L&G Developed World Value Index NTR and provides exposure to companies that appear undervalued compared to comparable companies.
Each of the indices has also been designed to incorporate practical considerations, such as transaction costs and turnover, which is seen as a key advantage of the strategies
Ben Cherrington, Head of UK Wholesale, Asset Management, L&G: “We are delighted to introduce this range of funds to our wholesale investors in the UK. Factor investing has been underrepresented in wholesale portfolios, and so we have pooled our internal expertise to develop something that is both differentiated, while meeting the distinct requirements of our end-investors.
Stefan Bilby, Head of Index Distribution, Asset Management, L&G: “With the market environment remaining volatile and uncertain, the role for factor strategies is highly relevant given their ability to enhance diversification, manage risk, and capture persistent sources of return. The funds incorporate L&G’s factor framework which offers a modernised approach to factor investing, which enhances factor definitions through the integration of investment manager insights, supporting a more dynamic and informed investment approach.
The funds will be managed by L&G’s Index team, which collectively manages over £517bn[1] in assets and has over 35 years in experience. The Index Solutions team who developed these strategies have expertise across global equities, fixed income, and alternatives, working alongside investors to deliver flexible and differentiated index solutions on behalf of our global client base.
