UK insurance group Legal & General has continued its international expansion, making its first foray into the $6trn (€4.4trn) US defined contribution (DC) industry with the acquisition of Global Index Advisors (GIA).

The firm’s US asset management subsidiary, LGIMA, will complete the $50.4m deal later this year, subject to shareholder approval, making it the insurer’s fifth purchase in 12 months.

GIA, based in the state of Georgia, currently runs index target date fund products for its US clients, and is an investment sub-adviser to the Wells Fargo Advantage Dow Jones Target Date Funds, a $15.6bn fund.

L&G said its entrance into the target date arena would help cement its plan to grow assets in the DC space, in both the UK and the US.

Target date funds offer an alternative default fund option for defined contribution schemes than basic life-styling.

It operates in a similar fashion, however, adjusting investment strategies for members in a more scaled manner, and works towards a target retirement date, rather than the member’s age.

Target date funds currently account for a significant proportion of the DC industry in the US, with assets under management expected to double by 2017.

The proposition is also taking hold in the UK DC industry, which has already seen the government-backed National Employment Savings Trust (NEST) use target date for its auto-enrolment default fund solution.

Legal & General said it would fund the purchase of GIA through its cash reserves, which will deliver a return above the group’s benchmark after the first year.

Mark Zinkula, chief executive at Legal & General’s asset management arm, LGIM, said the DC market and international expansion were two key drivers of the insurer’s growth strategy.

“The acquisition of Global Index Advisors will allow us to accelerate our expansion in the US DC market,” he said.