Legal&General launches global inflation-linked bond fund
Legal & General Investments (L&GI)has announced the launch of Global Inflation Linked Bond Index Fund to help advisers diversify the fixed income element of client portfolios.
The fund will be the latest addition to L&GI’s index fund range offering investors “simple, lowcost and effective ways to save and invest for the future,” L&GI said.
The Legal & General Global Inflation Linked Bond Index Fund will track the Barclays World Government ex UK Inflation Linked Bond Index, which is comprised of inflation-linked bonds issued by governments from around the world, excluding the UK.
To be included in the index, bonds must meet the minimum A- rating for countries in the G7 or eurozone or have a minimum AA- rating for other issuers, with bond returns linked to the local rate of inflation of each of the constituent countries.
Simon Pistell, managing director, Legal & General Investments commented: “With the launch of this new fund, we are building on our commitment to offer simple, high quality and low cost funds to the retail market. L&GI has made it a priority to listen closely to customers and expand our range of market-leading index funds in order to offer the necessary building blocks with which they can construct diversified portfolios for their clients.
“Global inflation-linked bonds are a useful diversification tool for investors’ portfolios with a different return profile to conventional government bonds and a significantly lower duration than index-linked gilts, which will make up the majority of most investors’ inflation-linked allocation in the UK. They are also an excellent way for investors to provide part of their portfolio with a degree of inflation-proofing.”
The fund will be managed by Legal & General Investment Management’s Index Funds team, which will be led by Tim Beaven.
As L&GI explaiend, the team will manage the fund using its in-house expertise, focusing on close index-tracking, whilst looking to maximise returns and minimise portfolio costs. In order to remove return fluctuations due to currency, the fund will track a sterling-hedged index, with the portfolio hedging back to sterling in the same manner.
The new fund will require an annual management charge of 0.20%.