LGIM Real Assets expands in the United States with launch of Real Estate Equity platform
Legal & General Investment Management Real Assets (LGIM RA) has announced the appointment of Alexia Gottschalch as Head of Real Estate Equity, US, and Tim Watson as Head of Investment and Portfolio Management, US Real Estate Equity – two newly-created positions within LGIM America (LGIMA), to support the launch of a dedicated real estate equity platform in the United States (US) market.
These hires will bolster LGIM RA’s expansion into the real estate equity sector within LGIM America, building on the solid foundations established in the UK real estate equity market, which has operated since 1971 and currently manages assets of £24.1 ($29.3) billion1 on behalf of institutional and retail clients.
The announcement follows the launch of LGIM RA’s private credit capability in the US in 2017 and is designed to deliver on significant investor demand for real estate equity exposure on behalf of Legal & General Retirement America (LGRA) and third-party US clients.
The new US real estate equity platform will seek growth opportunities in a real estate equity market that is significantly larger and more liquid than the UK market. It represents an opportunity to leverage LGIM Real Assets’ established and highly transferable core competencies in urban regeneration, Build to Rent (BTR) and long-lease property. It will support both LGRA’s US Pension Risk Transfer (PRT) and third-party clients with a focus on key sectors, such as multi-family residential and life sciences, while continuing LGIM RA’s market-leading implementation of ESG through the investment process.
Based in Chicago, Gottschalch will be responsible for building out the US real estate equity platform incorporating Acquisitions, Asset Management, Operations, Financial Planning, Marketing, Product Development and Strategic Initiatives. Gottschalch will dually report to the CEO of LGIM America and the Global Head of Real Assets in London.
In his role, Tim Watson will be responsible for developing investment programs, identifying new investment opportunities, and oversight of investment and portfolio performance. Watson is also based in Chicago and will report to the Head of Real Estate Equity, US.
Bill Hughes, Global Head of Real Assets:
“We are delighted to welcome Alexia and Tim to the LGIM Real Assets team. The launch of our equity capabilities in the US represents a huge opportunity to mirror our success in the UK, investing in the real economy to improve lives and deliver positive social outcomes.”
Aaron Meder, CEO, LGIM America:
“Alexia and Tim will be invaluable as we launch our real estate equity platform to the US market. In the US, renewables, commercial property and Build to Rent are asset classes which have existing large market opportunities and where we believe our clients can benefit from our new leadership team’s investment expertise and insights.”
Alexia Gottschalch, Head of Real Estate Equity, US:
“I’m very excited to be joining LGIM Real Assets at such a pivotal time in the business’ US expansion journey and to launch the Real Estate Equity platform. The team and I are keen to build upon LGIM RA’s proven track record, looking to provide excellent investment solutions and services to institutional investors across the US.”
Gottschalch brings a wealth of experience to the role, having joined from Aegon Asset Management where she was Managing Director, Global Head of Client Strategy, Real Assets and US Head of Equity Real Assets. Over her 27-year-long career, she has also held leadership positions at Invesco, JP Morgan, Grosvenor, Independence Capital Partners and Prudential Financial.
Watson also joins from Aegon Asset Management where he was a Portfolio Manager overseeing investment performance and capital deployment for various strategies, with a particular focus on affordable and value-add multifamily real estate investment. He has also held positions at RBC Capital Markets, National Equity Fund and JPMorgan Chase.
1 Source: LGIM Real Assets. AUM data as at 30 June 2022 (GAV, including crossholdings).
LGIM launches Global Thematic Fund
Legal & General Investment Management (LGIM) has announced the launch of a Global Thematic Fund. Through this fund, investors will be able to access multiple investment themes focused on innovation and long-term growth while seeking to maximise diversification.
The fund, which is structured as an onshore unit trust, has been designed specifically for UK investors following an increasing demand for access to multiple themes. As a renowned specialist1 in constructing thematic investment funds, LGIM has brought together eight investment themes into the Legal & General Global Thematic Fund (‘the Fund’), in the areas of technology, energy and resources and changing demographics, all of which are currently available to investors via a suite of L&G building-block ETFs.
By combining the investment universes of its existing individual thematic strategies, LGIM has created a simple and easily accessible fund for investors seeking exposure to a portfolio of companies that we believe are positioned to benefit from these long-term themes. This fund brings together LGIM’s deep expertise in active index design, active research, and investment stewardship alongside tracker-like implementation.
With an underlying investment universe of just over 400 stocks the Fund uses a quantitative allocation model to provide exposure to growth themes while seeking to maximise diversification. This model aims to improve overall portfolio volatility and return characteristics as each theme evolves over time, weighting the underlying thematic strategies so that they contribute approximately the same level of risk to the Fund. The underlying thematic strategies invest in unique stocks not typically captured by traditional market cap weighted benchmarks, and the Fund therefore allows investors to complement their existing investments with exposure to a wider range of growth-oriented companies.
The Fund itself will be managed by Dave Barron, Head of Index Equity and Smart Beta at LGIM and is benchmarked against the MSCI World Total Return Net Index. As one of the largest providers of index funds in the UK, LGIM has offered index products to customers for over 30 years. This fund will leverage LGIM’s scale, index and ETF expertise while seeking to minimise transaction costs, savings which can be passed back to investors.
“Thematic investing has risen in popularity in recent years, thanks to its ability to capitalise on the structural and foundational changes shaping our society.
However, we often hear from clients about the challenges of accessing ETFs and having to choose between specific investment themes, and in designing the Global Thematic Fund, we wanted to make that decision easier. By providing a single point of entry to a diversified universe of companies, the fund offers investors access to a broad range of growth opportunities. We believe it to be an attractive proposition for advisers seeking differentiated investment ideas for clients and a unique and cost-effective way to invest in the themes that are shaping the future of our environment, work and society.”
James Crossley, LGIM’s Head of UK Retail Sales
“The Global Thematic Fund complements the success of LGIM’s ETF and thematic businesses, offering clients simple access to diversified themes, which traditionally have been difficult to capture in a single product. We are proud of the strong track record of the existing strategies within our thematic universes and are pleased to bring the investment philosophy to a wider investor audience.”
Aanand Venkatramanan, Head of ETF Investment Strategies at LGIM
LGIM launches three Quality Equity Dividend ETFs
Legal & General Investment Management (LGIM) has today launched a range of three Quality Equity Dividend ETFs, which have been designed for investors seeking equity income with quality screens and responsible exclusions.
The three ETFs track FTSE Russell indices and follow proactively designed index investment strategies, which have been tailored for investors by LGIM and FTSE Russell. These indices rely on the quality of the underlying companies, looking for those with strong dividend characteristics while excluding those facing significant ESG risks. The following funds have been listed on the London Stock Exchange and are available to UK intermediary and retail investors.
L&G Quality Equity Dividends ESG Exclusions UK UCITS ETF
L&G Quality Equity Dividends ESG Exclusions Europe ex-UK UCITS ETF
L&G Quality Equity Dividends ESG Exclusions Asia Pacific ex-Japan UCITS ETF
The ETFs have been designed to meet two main objectives for advisers and their clients. On the one hand, with mainstream bond yields at or near all-time lows, the search for income remains a great challenge. On the other, capital preservation also remains a central requirement for investors. The increasing pressure on companies being able to provide investors with sustainable dividends has impacted their capital, and these funds therefore seek consistent dividend payers. They also apply a quality screen to help investors avoid value traps by excluding companies that do not have positive return on equity or robust balance sheets.
The ETFs’ methodology applies a set of three systematic screens for dividends, quality and ESG exclusions. The purpose of the quality screen is to help identify and remove stocks with a fundamentally poor balance sheet and/or income statement characteristics. A quality score is calculated by FTSE as a geometric average of three underlying metrics: company earnings, assessing profitability and cash components; asset growth; and leverage metrics.
The dividend screen aims to maximise exposure to a basket of stocks which have a track record of consistent and rising shareholder distributions and the potential to sustain them into the future. This means identifying companies paying consistent and resilient dividends based on their positive return on equity, a demonstrably positive trend in the dividends distributed per share and a higher consensus forecast on dividend yields.
The purpose of our ESG screen is to exclude companies we believe are exposed to material financial risks based on their business models or operations, applying a number of FTSE exclusion lists to the underlying stocks in the portfolios such as those in breach of the UN Global Compact, involved in manufacturing controversial weapons, and thermal-coal miners and power producers. In addition to exclusions, we apply an active ownership approach with constituent companies, engaging with them on ESG concerns through LGIM’s award-winning Investment Stewardship team, which seeks to raise ESG standards in all holdings.
LGIM sought to work with an index partner in FTSE Russell that covers 98% of the investable market, offering a true picture of global markets and specialist knowledge in developing local benchmarks around the world. Its index design and management are backed up by a transparent rules-based methodology and informed by independent committees of leading market participants.
These three new funds will build on and complement LGIM’s existing suite of core and thematic ETFs across different asset classes, bringing the total range to 41 funds, 33 of which are available on the Italian, German and Swiss stock exchanges. In recent months LGIM has been one of the fastest growing ETF issuers in Europe, with its innovative range of thematic ETF strategies and new ESG fixed income strategies helping to deliver a top 10 position for European net flows in 2020[1].
[1] According to Data from consultancy and research firm ETFGI show Legal & General Investment Management’s ETF arm was one of the biggest winners last year, ending 2020 with $8.5bn in ETF assets — an 89.4% increase from the end of 2019 and the highest rise of any top 20 ETF player.
We apply a rigorous series of quantitative screens to select stocks based on their quality metrics, dividend characteristics, and ESG profile. We look to identify those quality companies that can sustain a consistent dividend and thus believe that this fund range is a powerful proposition for investors seeking to address their search for income, desire for growth potential, and an increasing awareness of ESG risks
Howie Li, Head of ETFs at LGIM
Dependable income is something investors are crying out for in the current environment, but some stocks with high dividend yields may be value traps with poor fundamentals and weak growth prospects. We believe that in giving investors exposure to a range of quality companies, with strong dividend characteristics and avoiding material ESG risks, we are well positioned to help them generate consistent income in their portfolios. These new funds add to what is already an impressive suite of ETFs, increasing the depth and breadth of LGIM’s offering to investors
James Crossley, Head of UK Retail Sales at LGIM