LGIM launches Multi-Index Income range

The new range builds on the success of LGIM’s risk-targeted Multi-Index Fund range, which recently surpassed £600m in assets under management. The Legal & General (L&G) Multi-Index range launched two years ago to provide advisers with a cost-effective investment solution that allows them to easily match their clients’ risk profiles.

The L&G Multi-Index Income 4, 5 and 6 Funds are also risk-targeted, to maintain their risk rating and suitability for investors over time, however they aim to produce a greater proportion of total return from income, in comparison to the original L&G Multi-Index range. Income will be distributed on a monthly basis in the income class; an accumulation class is also available.

The L&G Multi-Index Income Funds offer exposure to equities, bonds and direct property with an asset allocation bias towards income producing assets. The asset allocation of each Fund is built from the ground up by LGIM. The manager has access to data from Distribution Technology to confirm the Fund maintains the desired risk profile.

The lowest risk profile Fund, Multi-Index Income 4 Fund, will look to produce a greater proportion of its income from sources such as fixed income, whereas the higher risk profile funds, Multi-Index Income 5 and 6 Funds, will generate a greater proportion of their income from equities. Generating income through dividends can be less stable but have greater potential for income and capital to grow over time.

To be cost effective, the L&G Multi-Index Income Funds will gain exposure to markets primarily via L&G’s popular index tracking funds, alongside some investment in L&G’s active funds and external income-focused ETFs used to bias the total return towards income.

The L&G Multi-Index Income Fund range will be managed by the same team as the L&G Multi-Index range, with lead fund managers being Justin Onuekwusi and Andrzej Pioch, working alongside co-managers Bruce White and Martin Dietz. The asset allocation of the Funds is dynamically managed using the investment resources of the 32-strong asset allocation team at LGIM, which manages over £30 billion in multi-asset funds.

Justin Onuekwusi, lead fund manager for the L&G Multi-Index Income Fund range said: “In this low-interest rate world, the industry has seen increasing demand for multi-asset income funds targeting high-yield levels. However, there are clear dangers that come with chasing income. It may not be sustainable or may force a change in a fund’s risk profile in order to meet yield targets. Advisers are looking for greater certainty of risk over time on behalf of their clients, as the success of our Multi-Index range has proved.

Rather than maximising income, we believe the focus should be on maximising total return for a given level of risk. Therefore, our Multi-Index Income funds do not target a specific yield, but bias sources of total return towards income producing assets while maintaining the suitability of risk profiles.”

The L&G Multi-Index 4, 5 and 6 Funds have returned 11.52%, 10.82% and 9.44% respectively between launch on 21 August 2013 and 30 September 2015.