LGIM develops multi-factor global equity strategy for Boots

One of the UK’s biggest fund managers, Legal & General Investment Management (LGIM), has launched a multi-factor global equity fund which is being backed by the Boots Pension Scheme, as an initial investor.

LGIM said that the new product is an expansion of its factor-based investing capability. Factor-based investing, which falls into the same general category as smart beta, risk premia or systematic investing, uses underlying performance drivers as the basis of a strategy that aims to offer a low-cost and transparent alternative to active stock-picking, with a better risk-adjusted return than conventional index-tracking based on market capitalisation.

Adam Willis, head of index and multi-asset distribution at LGIM, said: “Investors are 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.”

The new fund was developed by LGIM 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. In November 2017, LGIM launched a multi-factor global equities index with a climate change tilt, which was selected by the HSBC Bank UK Pension Scheme as its default equity option for its DC pension.