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Boots Pension Scheme backs Legal & General multi-factor fund

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Legal & General Investment Management (LGIM) has launched a multi-factor global equity fund with initial investment from the £7.2bn (€8.1bn) Boots Pension Scheme.

The LGIM Diversified Multi-Factor Equity Fund invests in a diversified portfolio of global equities based on smart beta factors, and is a pooled vehicle aimed primarily at UK institutional clients.

The group said the fund aimed to reduce risk relative to the global equity market by diversifying more effectively across regions and reducing stock-specific concentration.

Adam Willis, head of index and multi-asset distribution at LGIM, said investors were increasingly looking for alternatives to traditional market-cap and multi-asset products.

“Factor-based investing is growing in popularity as it can be used to meet different investment objectives in a cost-efficient manner,” he said.

The fund was developed in partnership with Scientific Beta, the provider of factor-based indices established by EDHEC-Risk Institute. The fund uses Scientific Beta’s recently launched High Factor Exposure indices as “building blocks” for the portfolio.

LGIM said it customised these building blocks to target a balanced factor exposure while enhancing diversification and reducing risk by controlling region and currency exposures.

The fund is run by multi-asset fund manager Andrzej Pioch alongside LGIM’s broader asset allocation team, which is responsible for more than £37bn.

LGIM manages £35bn in factor-based strategies and alternatively weighted indices. Last November, the fund manager launched the L&G Future World Fund in collaboration with the HSBC Bank UK Pension Scheme.

The multi-factor global equities index fund that incorporates a climate “tilt” to address the investment risks associated with climate change.

The fund was picked as HSBC Bank UK Pension Scheme’s equity default option within its defined contribution scheme.

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