One of LGIM’s flagship credit funds, the Core Plus Fund, is the top performer in its peer group (UK Bond Standard) over a three year period, according to CAPS data. The Fund has returned 12.8% per annum (p.a.), a relative out-performance of 5.5% p.a. compared to its benchmark (the iBoxx £ Non-Gilt index) since launching three years ago (data as at 30 June 2011).
The Fund, only available to UK pension schemes, is managed by Anton Eser. It targets a return of 1.15% p.a. above its benchmark (on a rolling three year basis). The team aims to deliver this out-performance consistently, with the Fund outperforming the iBoxx £ Non-Gilt index in 10 of the past 12 quarters.
The key strengths of LGIM’s Core Plus Fund are:
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An established fund management team, backed by a highly experienced team of economists, credit strategists and research analysts.
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A global investment process that incorporates:
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Rigorous macroeconomic research that helps determine key investment themes
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Detailed credit research that seeks to ensure high-quality issuer and security selection
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An integrated approach to exploiting relative value opportunities across global credit markets
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Dynamic risk management that seeks to protect gains and limits losses
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A ‘forward-looking’ investment approach which continuously tests how the Fund will react to extreme market events.
Anton Eser, Head of Global Credit and the lead Fund Manager of the Core Plus Fund said: “The volatility in global bond markets during the past three years, initially with the credit crunch and now with the sovereign crisis, has presented us with some excellent opportunities to generate significant excess returns for our clients. We've been able to do this largely due to our simple investment approach of focusing on the major macroeconomic themes that drive markets and being able to look across fixed income markets to find where the best investment opportunities lie. The consistency of the out-performance to date is largely due to a strong risk management culture relying primarily on our proprietary risk models.”
While fixed income used to be seen as a relatively predictable asset class within a pension fund's asset allocation, recent history has radically redefined the way investors look at these markets.
Throughout the past few years, LGIM has observed a marked increase in demand for more innovative solutions in fixed income. Malcolm White, Head of Fixed Income Sales at LGIM, confirmed:
"UK pension funds are increasingly looking to access global credit markets to diversify the risk within their fixed income allocation. The additional benefits of enhanced liquidity and the opportunity to improve risk-adjusted performance of fixed income portfolios are leading investors towards products with a wider set of levers to pull."
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