A simple cost-effective solution to help you serve your customers investment needs

2015 NATIONWIDE PRIMARY FUND RANGE FROM LEGAL & GENERAL A simple cost-effective solution to help you serve your customers’ investment needs. Nationw...
Author: Ariel Golden
1 downloads 0 Views 1MB Size
2015

NATIONWIDE PRIMARY FUND RANGE FROM LEGAL & GENERAL

A simple cost-effective solution to help you serve your customers’ investment needs. Nationwide Primary Fund Range from Legal & General

A suite of funds offering low-cost, straightforward, high-quality solutions to meet your customers’ investment needs. Each fund has a clear asset allocation range, allowing you to match funds to your customers based on how much risk they are willing to take.

This is not a consumer advertisement. It is intended for professional financial advisers and should not be relied upon by private investors or any other persons.

2015

NATIONWIDE PRIMARY FUND RANGE FROM LEGAL & GENERAL

ABOUT LEGAL & GENERAL Legal & General is one of the UK’s largest financial institutions. Established in 1836, the Legal & General Group is a trusted provider to over nine million customers in the UK for our life assurance, pensions, investments and general insurance plans. As one of the UK’s leading investment managers, Legal & General Investment Management (LGIM) offers scale and expertise that can bring real benefits to customers. We look after £715 billion across a range of asset classes, with £295 billion of index funds and £29 billion of multi-asset funds (as at 30 June 2015). LGIM began managing index funds in the 1980s, and we launched our first retail index fund in 1989. Since then, we’ve expanded the range to include diverse markets such as emerging markets, as well as fixed income index funds to meet customers’ evolving needs. LGIM has managed multi-asset solutions for over 35 years, enabling us to build on our expertise across different asset classes and create comprehensive customer-focused solutions.

Citywire source and copyright: Justin Onuekwusi is AA rated by Citywire for his three year risk adjusted performance for the period 30 September 2012 - 30 September 2015.

2

2015

NATIONWIDE PRIMARY FUND RANGE FROM LEGAL & GENERAL

3

A COMPREHENSIVE CUSTOMER SOLUTION A range of diversified portfolios designed to meet your customer needs The Nationwide Primary Fund range offers your customers access to a simple, cost-effective investment solution. The range includes eight funds designed to meet different customer requirements. There are six multi-asset funds that actively manage exposure to shares, bonds and alternative investments, along with two index-tracking funds that give diversified equity exposure. MULTI-ASSET TEAM

INDEX TEAM

Legal & General Mixed Investment

Legal & General Mixed Investment

Legal & General Mixed Investment

Legal & General Mixed Investment

0-20% Fund

0-35% Fund

20-60% Fund

40-85% Fund

Shares Bonds

Legal & General Global Equity Index Fund

Bonds

Shares Bonds

Bonds

Equity Trackers

Shares Shares

Lowest risk / lowest potential return

Legal & General (N) Tracker Trust

Highest risk / Highest potential return Legal & General Mixed Investment

Legal & General Mixed Investment

Income 0-35% Fund

Income 20-60% Fund

HELPING YOU AND YOUR CUSTOMERS Simple and easy to understand We’ve designed these funds so that they are easy for you to explain to customers: • The Mixed Investment Funds communicate the proportion of shares in each fund • The Equity tracker funds show the equity markets your customer will be exposed to • Income funds are clearly marked

S i m ple

M anaged Asset Allocation

Cost effective

ONE - STOP - SHOP

Managed asset allocation The Mixed Investment Funds offer an asset allocation focused approach managed by our multiasset funds team. Academic studies have shown that 90% of a portfolio’s return comes from asset allocation1. We built the range to take account of the power of asset allocation in three key areas: • As a risk-management tool to reduce the impact of volatile markets • To access the risk management and return enhancing benefits of broad diversification • To position the funds to reflect a constantly changing investment environment Cost-effective Whatever funds you use, index tracker funds will play a large part, as our Mixed Investment Funds mainly use our own index funds as building blocks to create highly diversified portfolios. Using these index funds offers two key advantages: • Potential to reduce costs: Reduce turnover and other expenses to minimise performance ‘drag’ for your customers • Potential to enhance returns: Add value through implementation of index changes, corporate actions and dividend enhancement 1. Does Asset Allocation Policy Explain 40, 90 or 100% of performance? Roger G. Ibbotson and Paul D. Kaplan, Financial Analyst Journal, January/ February 2000.

2015

NATIONWIDE PRIMARY FUND RANGE FROM LEGAL & GENERAL

4

A SIMPLE SOLUTION TO MEET A RANGE OF CUSTOMER NEEDS The range has been assembled by Nationwide to aim to meet the needs of the different types of customers you serve, by offering funds with different long-term risk/return and income objectives. PRIMARY FUNDS FOR GROWTH Mixed Investment Funds

Legal & General Mixed Investment

Legal & General Mixed Investment

0-20%

Equity Index Trackers

Legal & General Mixed Investment

20-60%

Legal & General Mixed Investment

40-85% Fund

Fund

0-35%

100% company shares

Fund

Legal & General Global Equity Index Legal & General (N) Tracker

Fund

Customers’ risk tolerance LOW

HIGH

Mixed Investment Funds The name reflects the diversified nature of the exposure these funds provide, with the numbers corresponding to the proportion of company shares in each fund, allowing you to match your customers to different risk/return tolerances and expected outcomes. The funds serve as straightforward all-in-one portfolios. Equity index tracker funds These funds track an index to give your customers a return that closely follows the performance of either the UK stock market or global shares (as measured by the FTSE All-Share Index and FTSE World Index respectively). While both funds track a single index, each of these indices represent hundreds of underlying companies, reducing the risk of loss due to falls of any individual company. Shares generally have a higher potential for returns than other investments, which also means a higher risk of loss, especially in the short term. PRIMARY FUNDS FOR INCOME We offer two income-focused funds. These aim to provide an enhanced yield while still maintaining the same broad risk / return profile as the other Mixed Investment Funds. Reflecting this bias towards income, the mixed investment income funds will have different underlying holdings relative to the equivalent growth-orientated Mixed Investment Fund. Legal & General Legal & General

Mixed Investment

Mixed Investment

Income

Income

20-60% Fund

0-35% Fund

Aims to provide a regular income while maintaining a focus on capital preservation

Aims to provide a regular income, but takes more risk in order to offer the potential to grow your customers’ capital and income

2015

NATIONWIDE PRIMARY FUND RANGE FROM LEGAL & GENERAL

MANAGED ASSET ALLOCATION – MIXED INVESTMENT FUNDS The Mixed Investment Funds, managed by our multi-asset funds team, employ active asset allocation to help manage risk and reduce portfolio drift. Limits on equity investment are built into the fund process to ensure broad stability in the risk levels, while still giving our experienced asset allocation team the flexibility it needs to enhance returns and adapt to changing market conditions. ASSET ALLOCATION VS MANAGER SELECTION We believe that diversification and asset allocation are the keys to multi-asset fund returns. An assetallocation focused multi-asset solution carries a number of key benefits over other approaches such as multi-manager or manager selection. Diversification through asset allocation Diversification through manager selection

ADVANTAGES • Different views from different managers

ADVANTAGES • Focus on asset allocation

• Potential for more active security selection

• Team-based approach

DISADVANTAGES • Risk of loss of star fund manager • Risk of inconsistent / uncoordinated views • Risk of portfolio drift • Risk of missed rebalancing to remain suitable

• Efficient management of portfolio drift • Full line-of-sight to risk – no unintended consequences • Easy to understand • Cost-effective • Focused due diligence

• Extra due diligence requirement

DISADVANTAGES

• Potentially higher fees

• Risk of less perceived diversification

• More complexity

• Less scope for active management at individual security level

BROAD DIVERSIFICATION The Legal & General Mixed Investment Fund range offers real diversification across a wide range of funds, asset classes, countries and holdings in a single package. Each fund includes: • 15-20 different funds and asset classes • Equity investments across over 45 countries • Over 5,000 underlying holdings We deliver this broad diversification in a simple, transparent package. It’s easy to keep customers informed through a single Key Investor Information Document and regular factsheet. This gives customers more of an ‘at a glance’ overview of where their assets are invested, rather than having to look at one for each fund of a number of individual managers.

5

2015

NATIONWIDE PRIMARY FUND RANGE FROM LEGAL & GENERAL

6

MANAGED ASSET ALLOCATION – AN EXPERIENCED AND EXPERT TEAM The Mixed Investment Funds are managed by our multi-asset funds team – specialists in multi-asset solutions who also draw on the capabilities and resources of the broader LGIM investment platform. THE TEAM IN NUMBERS 240+

Combined years’ experience of multi-asset funds team

11

Average number of years experience of the multi-asset funds team

32

Investment professionals across the broader asset allocation team

£29bn The amount of assets the team manages, generating operational scale and efficiency

SPECIALISATION CREATES AN EDGE THAT DRIVES SUCCESSFUL INVESTING Three teams of specialists collaborating to drive investor outcome

Economists lead the macro economic discussion

Strategists

augment this with asset class research and translate views into trade proposals

Cooperative approach, with discussions in economics, strategy and fund management spanning across teams

Fund Managers oversee the overall portfolio taking into account market conditions and risk exposures

WHERE WE INVEST We make extensive use of index funds within our Mixed Investment Funds. This helps us offer transparent, high-quality asset allocation and wide diversification in a cost-effective way. CORE ASSETS Shares Bonds Alternatives and cash

Shares

Bonds

L&G UK Index Trust

L&G All Stocks Gilt Index Trust

L&G US Index Trust

L&G All Stocks Index Linked Gilt Index Trust

L&G European Index Trust

Targeted country bond futures (e.g. US, Germany, Australia)

L&G Japan Index Trust

L&G Global Inflation Linked Bond Index Funds

L&G Pacific Index Trust

L&G Sterling Corporate Bond Index Fund

L&G Global Emerging Markets Index Trust

L&G Short-Dated Sterling Corporate Bond Index Fund

Alternatives and cash iShares Global Infrastructure ETF iShares Developed Markets Property Yield ETF LGIM Commodity Composite Source ETF LGIM Sterling Liquidity Fund (Active)

L&G Fixed Interest Trust (Active) LGIM Global Credit OEIC (Active) L&G High Income Trust iShares Emerging Markets Local Government Bonds ETF L&G Emerging Markets Government Bond (US$) Index Fund For illustrative purposes only

2015

NATIONWIDE PRIMARY FUND RANGE FROM LEGAL & GENERAL

7

COST EFFECTIVE – INDEX FUNDS Legal & General Investment Management is one of the UK’s largest managers of index tracker funds. The Primary Funds range offers direct access to two of these funds, and our Mixed Investment Funds also use these as cost-effective building blocks to create diversified portfolios. COST MATTERS Using index funds – either directly or as a key component in the Mixed Investment Funds – helps keep the overall costs of your customer portfolios low. The cost-aware approach is reinforced by the economies of scale, expertise and efficiency as one of the UK’s largest managers of index trackers. LOWER COSTS CAN HAVE A SIGNIFICANT IMPACT ON YOUR CUSTOMERS’ INVESTMENT OUTCOME OVER THE LONGER TERM. As per the chart below, over 30 years, a customer in an index fund paying fees of 0.10% on an investment of £100,000 with a uniform gross rate of 6% per annum would gain just over 450%. A customer in an active fund paying 0.92% fees would achieve a return of just under 350% due to paying over £116,000 more in fees than the index fund. 500% 0.92% Typical UK active fund fee

400% % Increase

Increase to investment = 458%

0.10% Typical UK index fund fee

450% 350% 300% 250% 200%

Increase to investment = 342%

150% 100% 50% 0% 0

10

Years

20

30

A COST EFFECTIVE WAY TO TAKE A UK OR GLOBAL VIEW Nationwide customers using the Primary Funds range have access to two index funds. The Legal & General (N) Tracker Trust aims to provide customers with the returns of the UK stock market. For those wanting a broader investment, the Legal & General Global Equity Index Fund tracks a global benchmark, which includes the UK, but also provides exposure to markets such as the US, Europe and Japan. Legal & General Global Equity Index Fund

Legal & General (N) Tracker Trust

Index tracked

FTSE World Index

FTSE All-Share Index

No of companies represented in index

2500+

600+

Market capitalisation of index

£22,000 billion+

£2,000 billion+

Fund size

£33 million

£1,389 million

Source: LGIM, FTSE Figures as at 31 August 2015

2015

NATIONWIDE PRIMARY FUND RANGE FROM LEGAL & GENERAL

8

WHY LEGAL & GENERAL

SCALE LGIM is one of the biggest providers of index funds in the UK, and all our funds are UK domiciled. Over the past 25 years we’ve grown to manage £295 billion in index funds and £715 billion in total (as at 30 June 2015). This scale means that we are able to generate significant efficiencies and cost savings which we can then pass on to our customers.

EXPERTISE We have a large and well-resourced team who have developed an in-house philosophy for index fund management that we call ‘pragmatic replication’. What this means is that while our main aim is close tracking of the index, we also put a lot of time, effort and resources into trying to maximise returns for our customers – day in and day out.

SIMPLICITY We prefer to invest in physical securities wherever possible and use derivatives sparingly and only ever for efficient portfolio management. We don’t operate a securities lending programme either, so our customers’ exposure to additional risks is minimised and our index funds are kept as transparent and easy to understand as possible.

RESPONSIBLE INVESTING We believe that being a market leader means that we have a responsibility to work closely with the companies that we invest in. Being an active owner in these companies represents a tangible way in which we can positively impact the constituents of our index funds, effecting change and improving company performance. This is a win-win situation, as by doing the right thing we believe we can materially improve long-term returns for our customers.

KEEPING YOU INFORMED We have a range of materials to keep customers informed on their investments and our latest market views.

The value of investments and any income from them can fall as well as rise, is not guaranteed and your clients may get back less than they invest. These funds may invest overseas. Changes in exchange rates between currencies may cause the value of an investment and the level of any income to rise or fall. These funds are sensitive to interest rate changes. An increase in medium to long-term interest rates is likely to reduce the value of an investment in these funds. The funds invest in riskier bonds, known as sub-investment grade bonds. These bonds pay higher interest rates to try to provide more attractive income returns. To achieve this, greater risk is taken as the companies are more likely to miss payments or not repay the loan, resulting in the returns your clients’ investment falling. All rights in the FTSE World Index and FTSE All-Share Index (the “Index”) vest in FTSE International Limited (“FTSE”). “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE under licence. The Legal & General Global Equity Index Fund and Legal & General (N) Tracker Trust have been developed solely by Legal & General. The Index is calculated by FTSE or its agent. FTSE and its licensors are not connected to and do not sponsor, advise, recommend, endorse or promote the funds and do not accept any liability whatsoever to any person arising out of (a) the use of, reliance on or any error in the Index or (b) investment in or operation of the Legal & General Global Equity Index Fund and Legal & General (N) Tracker Trust. FTSE makes no claim, prediction, warranty or representation either as to the results to be obtained from theLegal & General Global Equity Index Fund and Legal & General (N) Tracker Trust or the suitability of the Index for the purpose to which it is being put by Legal & General. Legal & General (Unit Trust Managers) Limited. Registered in England and Wales No. 1009418. Registered office: One Coleman Street, London, EC2R 5AA. Authorised and regulated by the Financial Conduct Authority. Q0053198 10/15 H0157568

Suggest Documents