L&G Talks Asset Management

Live from the Landmark Hotel! We recorded this episode while at our DB/DC Client Conference where the topic of dealing with retirement anxiety was such a major topic. So that’s why we’re absolutely delighted to be joined by Julie Richards Group Director of Pensions of Boots Walgreens Alliance.

The challenges of whether pension scheme members are prepared enough for retirement (“the cliff edge”) and, crucially for all of us in the industry, what we can do more to make sure they feel in control of their pension and what their retirement will look like.

In a first for LGIM Talks, we also videoed this episode while on the road! Check out Simon and Julie on our YouTube channel here: https://www.youtube.com/channel/UCUmfV6VjfydEykC6QzXNPSQ/videos

·         Julie Richards, Group Director of Pensions of Boots Walgreens Alliance

·         Simon Chinnery, Head of DC Client Solutions, LGIM

We want to hear from you! Email us at [email protected] with your thoughts on the podcast and any suggestions of the guests or types of content you’d like to see covered.

This podcast is intended for investment professionals, and shouldn’t be shared with a non-professional audience. This podcast should not be taken as an invitation to deal in Legal & General investments. Any views expressed during this recording belong to the individuals and are based on market conditions at the time of recording, and do not reflect the views of Legal & General Investment Management. Legal & General Investment Management is authorised and regulated by the Financial Conduct Authority. Legal & General Investment Management, One Coleman Street, London, EC2R 5AA. Register in England no. 2091894. All rights reserved. No part of this audio may be reproduced in whole or in part without the prior written consent of Legal & General Investment Management.

What can Alex Ferguson’s career teach us about factor investing? In recent years, index and factor investing solutions have been bestsellers. But factor investing success is not a foregone conclusion, and there are plenty of quirks and misprints in the literature. 

In his new book, Index Fund Management: A Practical Guide to Smart Beta, Factor Investing and Risk Premia, Fadi Zaher simplifies the world of factors and calls out both the factor fanatics and the smart beta sceptics. This conversation touches on the five equity factors that matter – value, quality, momentum, low volatility and size – and why factors are the nutrients in your portfolio meal, you have to have a balance!

Fadi’s book is available on Amazon now and you can also find more of his writings on factor investing here: https://futureworldblog.lgim.com/authors/fadi-zaher/?cid=lgimtalks 

·         Fadi Zaher, Head of Index Solutions and author

·         Max Julius, Head of Content

We want to hear from you! Email us at [email protected] with your thoughts on the podcast and any suggestions of the guests or types of content you’d like to see covered.

This podcast is intended for investment professionals, and shouldn’t be shared with a non-professional audience. This podcast should not be taken as an invitation to deal in Legal & General investments. Any views expressed during this recording belong to the individuals and are based on market conditions at the time of recording, and do not reflect the views of Legal & General Investment Management. Legal & General Investment Management is authorised and regulated by the Financial Conduct Authority. Legal & General Investment Management, One Coleman Street, London, EC2R 5AA. Register in England no. 2091894. All rights reserved. No part of this audio may be reproduced in whole or in part without the prior written consent of Legal & General Investment Management.

 

Many investors will still tell you that responsible investment approaches begin and end with negative screens – excluding whole sectors such as oil & gas from portfolios. This is entirely understandable: if an investor wants an ESG integrated portfolio, it seems strange to continue to hold oil stocks. But when you apply this to a market-cap index – such as the MSCI World with its whopping 5% energy weighting – exclusion means allocating more to the technology and finance sectors as a result, perhaps not necessarily the diversification you might have been looking for from an index.

It’s also important to think about what exclusions do to your factor exposure. Swapping energy for tech might have been great for returns these past five years, but on a factor basis that means you will be overweight growth and underweight value going into the next turn of the economic cycle.

In this conversation, we discuss the unintended consequences of exclusions and dive into the ways ESG analysis can be integrated into index products to give you a high ESG impact without a high tracking error.

To find out more and read Dave’s full research paper, visit: www.lgim.com/friendorfoe?cid=lgimtalks

·         Dave Barron, Head of Index Equity & Smart Beta

·         Robert StGeorge, Content Manager

We want to hear from you! Email us at [email protected] with your thoughts on the podcast and any suggestions of the guests or types of content you’d like to see covered.

This podcast is intended for investment professionals, and shouldn’t be shared with a non-professional audience. This podcast should not be taken as an invitation to deal in Legal & General investments. Any views expressed during this recording belong to the individuals and are based on market conditions at the time of recording, and do not reflect the views of Legal & General Investment Management. Legal & General Investment Management is authorised and regulated by the Financial Conduct Authority. Legal & General Investment Management, One Coleman Street, London, EC2R 5AA. Register in England no. 2091894. All rights reserved. No part of this audio may be reproduced in whole or in part without the prior written consent of Legal & General Investment Management.

Many pension schemes store a huge amount of member data. But this is often difficult to access, incomplete or inconsistent, and stored in multiple formats – PDFs, spreadsheets and others. Schemes struggle to analyse their data, develop sample user personas, and make predictions about future trends and behaviours, let alone support members in improving their pension choices to improve outcomes.

Our episode this week explores how schemes can put this wealth of data to use. Trustees need to be able to cut through the noise of unnecessary data and find the insights in their specific members’ behaviour. For instance, member communication might not only better show their future total pension pot but also how they compare with others in the demographic group – are you saving more or less than people in a similar position? 

In an environment where trustees and scheme managers are time-poor, data-rich, and finding underlying information a struggle to organise, a one-stop-data-shop can provide a clearer picture of your scheme.

Read Stuart’s full article here: https://www.lgim.com/uk/en/insights/our-thinking/client-solutions/the-power-of-data-science.html?cid=lgimtalks

·         Stuart Murphy, Head of DC Client Management, L&G

·         Peter Jackson, Director of Group Data Sciences, L&G

We want to hear from you! Email us at [email protected] with your thoughts on the podcast and any suggestions of the guests or types of content you’d like to see covered.

This podcast is intended for investment professionals, and shouldn’t be shared with a non-professional audience. This podcast should not be taken as an invitation to deal in Legal & General investments. Any views expressed during this recording belong to the individuals and are based on market conditions at the time of recording, and do not reflect the views of Legal & General Investment Management. Legal & General Investment Management is authorised and regulated by the Financial Conduct Authority. Legal & General Investment Management, One Coleman Street, London, EC2R 5AA. Register in England no. 2091894. All rights reserved. No part of this audio may be reproduced in whole or in part without the prior written consent of Legal & General Investment Management.

Advisers are no stranger to the PFS. With its royal charter to ‘secure and justify the confidence of the public’, this professional body is committed to helping its members develop their careers and maintain high standards through competence, integrity and care for the customer. Under the leadership of Keith Richards, the society has focused on three key pillars: (1) greater member engagement, (2) involvement in regulatory and public policymaking and (3) engaging the public to raise awareness about the high-quality service available.

In this week’s episode, I talk to Keith about how advisers can demonstrate real value for their clients, the booming market for advisers overseas and the demand for well-qualified professionals, and of course, costs and regulation. From the Pension Transfer Gold Standard to the amazing pro-bono community work its members can take part in, our conversation covers almost everything about what it means to be an adviser today and his prediction that we’ll still see some of the family names above advisory firms still there in 100 years’ time.

Find out more about the work of the PFS here: https://www.thepfs.org/

·           Keith Richards, CEO, The Personal Finance Society

·           Mark Chappel, Senior Content Manager

We want to hear from you! Email us at [email protected] with your thoughts on the podcast and any suggestions of the guests or types of content you’d like to see covered.

This podcast is intended for investment professionals, and shouldn’t be shared with a non-professional audience. This podcast should not be taken as an invitation to deal in Legal & General investments. Any views expressed during this recording belong to the individuals and are based on market conditions at the time of recording, and do not reflect the views of Legal & General Investment Management. Legal & General Investment Management is authorised and regulated by the Financial Conduct Authority. Legal & General Investment Management, One Coleman Street, London, EC2R 5AA. Register in England no. 2091894. All rights reserved. No part of this audio may be reproduced in whole or in part without the prior written consent of Legal & General Investment Management.

Unfortunately, and as much as we might like it to be the case, there is no miracle elixir for defined benefit schemes. Rather than hoping for magic, we’ve identified some tried and tested methods for making sure schemes run like well-oiled machine – mixed metaphors aside. 

Studies have long shown that asset allocation is hugely important, typically accounting for the vast majority of the variation in portfolio returns over time. So focusing on asset allocation, alongside rigorous risk management and cost control within a strong governance framework, is what will drive improved outcomes for schemes. That in turn can create a more stable corporate balance sheet and improve benefit security for members. However, we often see significant time spent picking lots of different investment managers – either directly or via a fiduciary manager – who come with the promise of added value, despite there being no comprehensive evidence either way.

In this conversation, we discuss the key ways defined benefit schemes can improve their effectiveness.

·         Lisa Purdy, Head of Fiduciary Distribution

·         Mark Vickery, Client Director

·         Eliza Grimond, Content Manager

We want to hear from you! Email us at [email protected] with your thoughts on the podcast and any suggestions of the guests or types of content you’d like to see covered.

This podcast is intended for investment professionals, and shouldn’t be shared with a non-professional audience. This podcast should not be taken as an invitation to deal in Legal & General investments. Any views expressed during this recording belong to the individuals and are based on market conditions at the time of recording, and do not reflect the views of Legal & General Investment Management. Legal & General Investment Management is authorised and regulated by the Financial Conduct Authority. Legal & General Investment Management, One Coleman Street, London, EC2R 5AA. Register in England no. 2091894. All rights reserved. No part of this audio may be reproduced in whole or in part without the prior written consent of Legal & General Investment Management.

Her path from sports to asset management is a fascinating one – from her first job in Dublin, to London where international clients would mistake her for French because of her distinctly un-Irish name! After having been recruited into recruiting by a recruiter at asset manager M&G, she saw how this world is about connecting with talent and how do we as a company and an industry present ourselves as a place where people can be themselves. Her passions lie in communicating a company’s culture and values, and capturing people’s hearts and minds in creating a more inclusive workplace.

To kick off LGIM’s ‘Inclusion Week’, this conversation covers the whole range of issues surrounding diversity – which have often only been talked about in silos – and why culture matters; it underpins every part of our working lives and is essentially to creating that sense of belonging.

·         Colette Comerford, Head of Inclusion & Culture

·         Mark Chappel, Senior Content Manager

We want to hear from you! Email us at [email protected] with your thoughts on the podcast and any suggestions of the guests or types of content you’d like to see covered.

This podcast is intended for investment professionals, and shouldn’t be shared with a non-professional audience. This podcast should not be taken as an invitation to deal in Legal & General investments. Any views expressed during this recording belong to the individuals and are based on market conditions at the time of recording, and do not reflect the views of Legal & General Investment Management. Legal & General Investment Management is authorised and regulated by the Financial Conduct Authority. Legal & General Investment Management, One Coleman Street, London, EC2R 5AA. Register in England no. 2091894. All rights reserved. No part of this audio may be reproduced in whole or in part without the prior written consent of Legal & General Investment Management.

E-commerce has changed the way we shop in a rapid space of time, growing at an annual average of 17% according to ONS calculations. But our demand for quick, reliable delivery has driven up the demand for logistics-capable properties closer to urban centres and this has reinvigorated the once ‘steady and dull’ industrial real assets sector. Prologis estimates that e-commerce logistics requires three times the floorspace of conventional logistics – a clear opportunity for investors’ capital.

But investors piling into the urban logistics trend risk overpaying. A careful consideration of both macro location (growing populations, supportive density, and improving consumer spending) and micro location (which side of the low-emission zone will be best for business?) is key for performance.

Our conversation this week dives into the ways this investment theme has developed over the years, why it’s likely to keep growing and also the risks investors should consider before going in guns blazing. 

Read Bill’s blog on the subject here: https://futureworldblog.lgim.com/categories/insights/urban-logistics-externalities-and-opportunity/?cid=lgimtalks 

·         Bill Page, Business Space Research Manager, Real Assets

·         Tim Packer, Assistant Fund Manager, Real Assets

·         Mark Chappel, Senior Content Manager

We want to hear from you! Email us at [email protected] with your thoughts on the podcast and any suggestions of the guests or types of content you’d like to see covered.

This podcast is intended for investment professionals, and shouldn’t be shared with a non-professional audience. This podcast should not be taken as an invitation to deal in Legal & General investments. Any views expressed during this recording belong to the individuals and are based on market conditions at the time of recording, and do not reflect the views of Legal & General Investment Management. Legal & General Investment Management is authorised and regulated by the Financial Conduct Authority. Legal & General Investment Management, One Coleman Street, London, EC2R 5AA. Register in England no. 2091894. All rights reserved. No part of this audio may be reproduced in whole or in part without the prior written consent of Legal & General Investment Management.

 The last decade has transformed the investment grade credit market. It’s not just that the size of the market has grown immensely, it’s that the average credit quality is much lower, meaning that risk of ‘fallen angel’ downgrades from investment grade to high yield rating is much higher. When the team stress-tested the investment grade market, the results were surprising: the number of expected downgrades could reach levels not seen since 2016. 

We interview Madeleine about the research, why investor’s earlier fears about company over-leveraging have softened as balance sheets improved and why a hard Brexit might not drive up the number of UK downgrades as you might think.

·         Madeleine King, Co-Head of Pan-European Investment Grade Research

·         Mark Chappel, Senior Content Manager

We want to hear from you! Email us at [email protected] with your thoughts on the podcast and any suggestions of the guests or types of content you’d like to see covered.

This podcast is intended for investment professionals, and shouldn’t be shared with a non-professional audience. This podcast should not be taken as an invitation to deal in Legal & General investments. Any views expressed during this recording belong to the individuals and are based on market conditions at the time of recording, and do not reflect the views of Legal & General Investment Management. Legal & General Investment Management is authorised and regulated by the Financial Conduct Authority. Legal & General Investment Management, One Coleman Street, London, EC2R 5AA. Register in England no. 2091894. All rights reserved. No part of this audio may be reproduced in whole or in part without the prior written consent of Legal & General Investment Management.

 When contemplating what the final months of 2019 might have in store, we are probably similar to many other investors in feeling somewhat apprehensive, given the challenges we face: trade tensions, slowing growth, policy uncertainty and, of course, Brexit. Global growth has cooled over the last year and so the key question is whether the world economy has the underlying strength to prevent a number of key risks – from trade tensions, to a manufacturing slowdown, to Brexit – from tipping it towards recession.

This week, Sonja Laud and Emiel van den Heiligenberg discuss the their outlook for markets, their expectations for inflation and why, even in this uncertain environment, the Asset Allocation team still prefer equities to credit.

Read the full outlook here: http://www.lgim.com/uk/en/knowledge/thought-leadership/?cid=lgimtalks 

·         Sonja Laud, Chief Investment Officer

·         Emiel van den Heiligenberg, Head of Asset Allocation

·         Max Julius, Head of Content

We want to hear from you! Email us at [email protected] with your thoughts on the podcast and any suggestions of the guests or types of content you’d like to see covered.

This podcast is intended for investment professionals, and shouldn’t be shared with a non-professional audience. This podcast should not be taken as an invitation to deal in Legal & General investments. Any views expressed during this recording belong to the individuals and are based on market conditions at the time of recording, and do not reflect the views of Legal & General Investment Management. Legal & General Investment Management is authorised and regulated by the Financial Conduct Authority. Legal & General Investment Management, One Coleman Street, London, EC2R 5AA. Register in England no. 2091894. All rights reserved. No part of this audio may be reproduced in whole or in part without the prior written consent of Legal & General Investment Management.