Legal & General Investment Management (LGIM) has launched a new pooled fund platform which offers pension schemes a transparent, flexible and easy-to-implement Liability Driven Investment (LDI) solution.
Kerrigan Procter (pictured), Head of the Solutions Group at LGIM, says: “The management of risk is extremely important to pension schemes. As trustees and clients become increasingly aware of the all the risks they face, they are looking to investment managers to provide them with the tools to manage and reduce these risks. Flexibility and transparency is paramount and these characteristics are evident in our new Matching Plus platform”.
Many pension schemes have seen their funding levels heavily influenced by volatility in financial markets, particularly movements in interest rates and expected inflation. LGIM’s new Matching Plus platform offers schemes a highly effective and accessible way to work towards aligning the sensitivity of their investment portfolios and pension payments to these market movements.
The platform combines the choice from a comprehensive range of liability hedging funds designed to reduce exposure to fluctuating interest rates and/or inflation expectations with access to LGIM’s extensive range of established return-seeking investment funds. The ability to ‘mix and match’ the two types of funds enables schemes to build a far more tailored liability-aware investment solution which suits the scheme’s objectives.
The new platform also gives investors the flexibility to change investment strategies as the funding position of a pension scheme alters over time. It has been designed to be ‘future-proofed’, to minimise the impact of possible regulatory and market changes.
Since clients receive a combined investment return from this LDI solution across both liability hedging funds and return-seeking investments, they are able to monitor the performance of their total investment portfolio against their liability payments. This significantly enhances the level of transparency available to pension schemes in managing their liabilities.
“LGIM is at the forefront of developing investment solutions for clients and our new Matching Plus platform, developed after significant client feedback, is the latest set of tools we are pleased to make available to clients. We are confident that it will prove popular especially amongst small and medium sized pension schemes and those seeking a low governance solution.” Kerrigan says.