To discover more about LGIM Buy and Maintain strategies, please visit our focused capability page
Three Minutes With
What value does being one of the biggest B&M managers bring to clients?
We at LGIM will continue managing these assets until the last member’s pension is paid
For clients wanting to take ESG a step further we can also incorporate net zero and other climate objectives
What is the most important factor in managing a B&M portfolio?
Lisa: Buy and Maintain for many clients is a core long-term holding – their banker portfolio – which looks to earn them a return over gilts year-in-year-out. Our key focus is on managing risk and delivering returns so that we can aim to deliver those cashflows securely and efficiently.
We’ve successfully delivered the credit premium for our clients over the last ten years.
We’ve also focused on avoiding defaults and downgrades and I’m very pleased to note that we have never had a default in our B&M portfolios.
This is due to our robust process that is based on the core principles of diversification, macro-economic outlook and fundamental credit research. This is across both the buy process, when we are choosing individual bonds for the portfolio but also in the maintain process, where we monitor the portfolio and take decisions about when to exit a bond.
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LGIM’s Lisa Purdy, Head of DB Solutions Distribution and Maurice Browne, Head of Buy and Maintain discuss 10 years of providing buy and maintain strategies for their clients.
LGIM originally developed the Buy & Maintain strategy for managing the insurance portfolio for Legal & General. Responsible for paying over a million people’s pensions, the firm wanted a fund aiming to deliver strong and stable cash flows, while also seeking to manage risks and generating returns. This is what many pension schemes are looking for – and so Buy & Maintain was born.
Over the years LGIM has launched maturing B&M credit strategies to seek to better match cashflows, and strategies that aim to incorporate ESG objectives such as net zero and alignment with the UN’s Sustainable Development Goals.
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Three
Minutes
With
Lisa Purdy and Maurice Browne celebrate 10 years of the flagship LGIM Buy and Maintain Credit fund
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For professional clients only. Capital at risk
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INTRODUCTION
Video interview
ESG considerations
Environmental impact
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Whilst LGIM can integrate Environmental, Social, and Governance (ESG) considerations into its investment decision-making for part of the fund, and stewardship practices, this does not guarantee the achievement of responsible investing goals within the portfolio.
Important Information: For professional clients only. Past performance is not a guide to the future. The value of an investment and any income taken from it is not guaranteed and can go down as well as up, you may not get back the amount you originally invested. The details contained here are for information purposes only and do not constitute investment advice or a recommendation or offer to buy or sell any security. The information above is provided on a general basis and does not take into account any individual investor’s circumstances. Any views expressed are those of LGIM as at the date of publication. Not for distribution to any person resident in any jurisdiction where such distribution would be contrary to local law or regulation. Please refer to the fund offering documents which can be found at https://fundcentres.lgim.com/
This financial promotion is issued by Legal & General Investment Management Ltd. Registered in England and Wales No. 02091894. Registered office: One Coleman Street, London EC2R 5AA. Authorised and regulated by the Financial Conduct Authority.
Legal and General Assurance (Pensions Management) Limited. Registered in England and Wales No. 01006112. Registered Office: One Coleman Street, London, EC2R 5AA. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, No. 202202.
Lisa: We leverage our size and scale to save costs for clients. This is done through the scale of the LGIM platform and our ability to cross trade internally. We can leverage our size externally to deliver better new issue allocations in the primary market and efficient execution in the secondary market.
B&M is also an important strategy for our business, which means we continue to benefit from internal investment into systems, people and reporting, helping us to deliver excellent service to our clients.
How do you incorporate ESG into B&M portfolios?
Maurice: ESG is integrated into all B&M portfolios at a firm level; we also factor in ESG risks into our credit research process at the sector and issuer levels. This is combined with our active engagement which we undertake across the firm.
For clients wanting to take ESG a step further we can also incorporate net zero and other climate objectives as well as UN SDG alignment, where we evaluate whether companies are aligned to the SDGs and how well, and tilt portfolios towards companies that score better.
Maurice: I’m really proud of how many of our clients we have been able to take along the full pensions de-risking journey, ending with a buyout with L&G - we have transferred over £800m of assets from the pooled B&M funds across to our Legal & General Retirement annuity portfolio. We believe we have helped these clients achieve their objectives and as we also manage the insurance portfolio, we at LGIM will continue managing these assets until the last member’s pension is paid.
Bringing value
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Incorporating ESG
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Key factor
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INTRODUCTION
Three Minutes With
Best experience
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What is your best experience of managing B&M portfolios over the last 10 years?
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RISK: Diversification and asset allocation may not fully protect you from market risk.
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1. Source: LGIM internal data as at 31 May 2024.
