Legal & General Investment Management (LGIM) has launched a new secure income funds for DB schemes, which invest in range of assets including infrastructure debt, real estate debt and private corporate debt.
DB pension can select the Secure income Asset Fund combines these various strategies into an open-ended pooled structure, subject to a lock-in period.
The fund targets stable long-term cashflows, and aims to deliver a return of gilts +2.5 per cent over a rolling three year period.
For UK pension schemes seek a more bespoke solution, five single strategies have been launched as separate unit-linked life funds. These are:
- Legal & General Senior Real Estate Debt Fund
- Legal & General Investment Grade Infrastructure Debt Fund
- Legal & General Investment Grade Private Corporate Debt Fund
- Legal & General Sub-Investment Grade Infrastructure Debt Fund
- Legal & General Sub-Investment Grade Private Corporate Debt Fund.
All the Funds within the Secure Income Asset Solutions range have an open-ended pooled structure subject to a lock-in period, which enables clients to invest in secure income assets without facing any additional governance burden. This is particularly relevant for smaller schemes that may find such asset classes ordinarily out of reach due to the higher minimum investment and governance required. The flexibility of the offering means it can be adapted to suit clients’ liability hedging, cashflow matching and liquidity purposes.
Through its Real Assets platform, LGIM is one of the UK’s largest real assets managers, actively investing in, and managing, assets across commercial, operational and residential property sectors, as well as infrastructure, real estate, corporate and alternative debt.
LGIM head of UK institutional clients, Mark Johnson says: “The launch of the Secure Income Assets Fund meets the growing demand from our UK DB scheme clients for innovative solutions that deliver reliable income.
“Investing long-term capital in secure income assets offers a compelling opportunity to generate these cashflows with attractive risk-adjusted returns and the potential for long term owners of capital – insurers and pension schemes – to effect real and lasting change.”
Stuart Hitchcock, head of portfolio management, private credit, at LGIM Real Assets, said: “For investors with a long term view, secure income assets are a core part of a cashflow-driven investment strategy, delivering a breadth and depth of universe not available in the public market.
“By negotiating better structural protections than public market equivalents, we aim to provide improved downside protection, reduced valuation volatility and lower correlation with traditional traded assets.
“With £14 billion AUM, the Private Credit business has seen considerable success across corporate, infrastructure and real estate debt. We have invested in some of the UK’s largest economic and social infrastructure, alongside renewable projects and real estate — our focus is to deliver significant financing to both the public and private sector, in order to serve our investment clients’ cash flow needs, while making a positive social impact.”
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