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Buy and Maintain Credit
For professional clients only. Capital at risk.
Buy and
Maintain
Credit
Aiming to generate cashow,
preserve capital and harness the
long-term credit risk premium
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Benets of LGIM
buy and maintain
credit
Buy and maintain credit
Buy and maintain portfolios seek to
capture the credit risk premium within a
globally diversied portfolio of
predominantly investment grade bonds,
while preserving value over the course of
the credit cycle. This is achieved by
seeking to avoid defaults and securities
that are experiencing a signicant
deterioration in credit quality.
ESG capabilities
ESG is integrated within all our buy and maintain credit portfolios, where
material ESG factors are identied using a dual top-down and bottom-up
approach. For schemes that want to take ESG integration a step further, we
are able to offer strategies with explicit Net Zero and UN SDG (UN
Sustainable Development Goals) alignment targets, using our forward
looking, proprietary in-house models. We believe our approach can help
uncover investment opportunities, and help to guard our clients from future
risks and lead to better investment outcomes.
04
Key risk - The value of any investment and any income taken from it is
not guaranteed and can go down as well as up, and investors may get
back less than the amount originally invested.
Globally diversied and a proven track record
Our buy and maintain credit strategies are globally diversied by sector,
issuer and region, with a long-term investment horizon which aims to
preserve and grow capital through avoiding defaults and enhancing credit
spread over time.
01
02
Integrated hedging and cashow matching
Buy and maintain credit provides interest rate exposure, contributing to a
pension scheme's overall hedging strategy while offering a yield pick-up
versus gilts. LGIM can fully integrate buy and maintain credit into pension
schemes' liability-driven investment strategies to optimise ecient
portfolio management and capital use. Buy and maintain credit places
emphasis on bonds with more predictable cashows that can be used to
help meet a pension scheme's cashow requirements, which can act as
the foundation for a cashow-driven investment strategy.
03
Preparation for endgame
Buy and maintain credit—an insurer-friendly asset—is aimed at providing
expected returns above government bonds, which can help increase a
pension scheme's funding level while aligning the scheme's asset
allocation to an insurer, potentially making buyout more affordable with
greater eciency. For schemes targeting self-suciency, we believe buy
and maintain credit can form an important part of this.
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We focus on the following areas:
The value of any investment and any income taken
from it is not guaranteed and can go down as well as
up, and investors may get back less than the amount
originally invested.
2. Macro thematic
research
1. Globally
diversied
•
Seeks to reduce
concentration risk
•
Take advantage of
relative value across
regions
•
Utilise the work of
in-house economists
•
Establish long-term
themes
•
Cross team debate
•
Average 16* years'
industry experience
•
RAG rating long-term
fundamental
assessment
•
Analyst / portfolio
manager interaction
ensures best ideas
implemented
•
Capital preservation
key
•
Long-term
perspective including
ESG
•
Enhances credit
spread premium
3. Fundamental
credit analysis
Value
Preservation
Additional features available
Climate-aligned Cashow-aware
Core features
Our approach
to buy and
maintain
The principle behind our approach to buy and maintain is
to structure a credit portfolio of investment grade
securities that can be held through to maturity. Our
investment process has two distinct parts: ‘buy’, which
determines initial portfolio construction; and ‘maintain’,
which covers portfolio monitoring, decisions about when
to hold and sell securities and how to replace the value
of bonds that have been sold.
Buy process
•
Driven by long-term thematic views
•
ESG fundamental to long-term credit
selection
•
Aiming to reect best bottom-up ideas
•
Filter out issuers of concern
Maintain process
•
Trade to preserve value based on changes
in fundamental views
•
Focus on eciency
•
Avoid defaults
Source: LGIM as at 31 December
2022
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ESG factors and sustainability
Standard approach
ESG integration
ESG factors are integrated into our credit research and issuer selection process. We seek to
understand how individual companies are managing ESG risks and opportunities. We evaluate these
factors alongside all other components of fundamental investment analysis.
Active engagement
Our Investment Stewardship and Investments teams engage globally with companies, industry peers
and policymakers to tackle systemic issues to address company-specic and market-wide risks and
opportunities. Read more about our approach in LGIM’s latest Active ownership report.
Climate leadership
LGIM is restlessly innovative in tackling the climate crisis, from modelling the energy transition via our
Destination@Risk tool, to conducting targeted engagements, such as our Climate Impact Pledge.
For schemes that want to take ESG integration one step further…
Climate alignment
Target net zero by 2050 with a ‘pathway to net-zero’ clearly established by 2030
through targeting a temperature alignment for the portfolio of 1.5C by that
date. Leverage our proprietary LGIM Destination@Risk model, which analyses
scenarios for how the energy system may evolve over the next 30 years – and
their investment implications.
UN SDG alignment
Exclude negatively-aligned companies, tilt towards positively-aligned
companies and seek to improve those on the borderline as part of our wider
engagement efforts.
This is not a matter of putting
principle before prot. It is putting
responsibility before reticence,
sustainability before silence.
Michelle Scrimgeour,
CEO, Legal & General Investment Management
Why LGIM?
We are Legal & General Investment Management (LGIM), the asset management business of Legal & General Group. Our purpose is to create a better future through responsible investing. We strive to achieve this through a strong sense of partnership
with our clients, working together to achieve positive long-term outcomes.
We draw on industry-leading expertise to innovate constantly across public and private assets, index and active strategies. And we are a responsible investor, rising to the challenges of a rapidly changing world. On behalf of savers, retirees and institutions
worldwide, we manage £1.159 trillion in assets.*
* Source: LGIM internal data as at 31 December 2023. The AUM disclosed aggregates the assets managed by LGIM in the UK, LGIMA in the US and LGIM
Asia in Hong Kong. The AUM includes the value of securities and derivatives positions.
Applies to all Buy and Maintain Funds
We offer climate- and SDG-aligned strategies in addition to the standard approach via
the Future World Net Zero Buy and Maintain Fund.
The value of any investment and any income taken from it is not guaranteed and can go down as well as up, and
investors may get back less than the amount originally invested. Assumptions, opinions and estimates are provided
for illustrative purposes only. There is no guarantee that any forecasts made will come to pass.
Whilst LGIM has integrated Environmental, Social, and Governance (ESG) considerations into its investment decision-making and stewardship practices,
this does not guarantee the achievement of responsible investing goals within funds that do not include specic ESG goals within their objectives.
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Buy and maintain capabilities
The value of any investment and any income taken from it is not guaranteed and can go down as well as up, and
investors may get back less than the amount originally invested.
Our experience
Global Buy and
Maintain Fund
Maturing Buy and
Maintain Credit Funds
Future World Net Zero
Buy and Maintain
Fund
Future World Net Zero
Maturing Buy and
Maintain Funds
Inception date May 2014 July 2019 June 2018 April 2023
Vehicle SICAV, PMC, Seg QIAIF, PMC, Seg QIAIF, PMC, Seg QIAIF, PMC, Seg
Evergreen*
Run off**
ESG integration
Climate alignment
UN SDG alignment
* Coupon and principle repayment are reinvested.
** Coupon and principle repayment are not reinvested but are distributed back to investors.
Over
30 years
Experience of
managing B&M credit
Over
£29 billion*
Managed in B&M credit
£378.1
billion**
AUM in strategies explicitly
linked to ESG criteria
*LGIM, as at 31 December 2023.
**LGIM, as at 31 December 2023. AUM in responsible investment strategies represents
only the AUM from funds or client mandates that feature a deliberate and positive
expression of ESG criteria, in the fund documentation for pooled fund structures or in a
client’s Investment Management Agreement.
Awards should not be considered a recommendation. Past performance is not a guide to the future.
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Fund risks
Global Buy and Maintain Fund, Maturing Buy and Maintain Credit
Funds
Past performance is no guarantee of future results.
The value of an investment and any income taken from it is not
guaranteed and can go down as well as up; you may not get back the
amount you originally invested.
The return from your investment is not guaranteed and therefore you
may receive a lower or higher return than you anticipated. There will
be a variation in performance between funds with similar objectives
due to the different assets selected.
PMC’s charges and associated transaction costs are subject to
change, with notice for the former and without notice for the latter.
Charges and transactions costs deducted from the policy reduce your
potential for capital growth in the future.
Tax rules and the treatment of income and capital gains could change
in the future and may be applied retrospectively.
Ination reduces the purchasing power of money over time as the
cost of purchasing goods and services increases. If the rate of
ination exceeds the rate of return on your portfolio, it will erode the
value of your portfolio and its investments in real terms.
In extreme market conditions it may be dicult to realise assets held
for a fund and it may not be possible to redeem units at short notice.
We may have to delay acting on your instructions to sell or the price at
which you cancel the units may be lower than you anticipated.
The value of a fund’s assets may be affected by uncertainties such as
international political developments, market sentiment, economic
conditions, changes in government policies, restrictions on foreign
investment and currency repatriation, currency uctuations and other
developments in the laws and regulations of countries in which
investment may be made.
PMC seeks to mitigate counterparty risk wherever possible on behalf
of its policyholders through a variety of measures which include: each
fund’s noncash assets being held with independent custodians,
sweeping cash (where appropriate) overnight into the LGIM’s range of
Liquidity funds (above a deminimus level), using the delivery versus
payment system when settling transactions and the use of central
clearing for exchange traded derivatives and forward foreign
exchange transactions. However, in the event of the failure of a
counterparty, custodian or issuer there is a residual risk that a fund
may suffer asset losses which are unrecoverable
Future World Buy and Maintain Credit Funds
Past performance is no guarantee of future results.
The value of an investment and any income taken from it is not
guaranteed and can go down as well as up; you may not get back the
amount you originally invested.
The return from your investment is not guaranteed and therefore you
may receive a lower or higher return than you anticipated. There will
be a variation in performance between funds with similar objectives
due to the different assets selected.
PMC’s charges and associated transaction costs are subject to
change, with notice for the former and without notice for the latter.
Charges and transactions costs deducted from the policy reduce your
potential for capital growth in the future.
Tax rules and the treatment of income and capital gains could change
in the future and may be applied retrospectively.
Ination reduces the purchasing power of money over time as the
cost of purchasing goods and services increases. If the rate of
ination exceeds the rate of return on your portfolio, it will erode the
value of your portfolio and its investments in real terms.
In extreme market conditions it may be dicult to realise assets held
for a fund and it may not be possible to redeem units at short notice.
We may have to delay acting on your instructions to sell or the price at
which you cancel the units may be lower than you anticipated.
The value of a fund’s assets may be affected by uncertainties such as
international political developments, market sentiment, economic
conditions, changes in government policies, restrictions on foreign
investment and currency repatriation, currency uctuations and other
developments in the laws and regulations of countries in which
investment may be made.
PMC seeks to mitigate counterparty risk wherever possible on behalf
of its policyholders through a variety of measures which include: each
fund’s noncash assets being held with independent custodians,
sweeping cash (where appropriate) overnight into the LGIM’s range of
Liquidity funds (above a deminimus level), using the delivery versus
payment system when settling transactions and the use of central
clearing for exchange traded derivatives and forward foreign
exchange transactions. However, in the event of the failure of a
counterparty, custodian or issuer there is a residual risk that a fund
may suffer asset losses which are unrecoverable
The FW ESG Funds have a sustainability and/or ESG focus in its
investment process which may i) limit the Fund’s exposure to or
exclude certain companies, industries or sectors ii) impact the Fund’s
investment performance compared to other funds that do not apply
such criteria and, iii) differ from an investor’s own sustainability and/
or ESG criteria.
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D006310
Key risks
The value of investments and the income from them can go
down as well as up and you may not get back the amount
invested. Past performance is not a guide to future performance.
Important information
The information in this document is for professional investors and their
advisers only. This document is for information purposes only and we are
not soliciting any action based on it. The information in this document is not
an offer or recommendation to buy or sell securities or pursue a particular
investment strategy and it does not constitute investment, legal or tax advice.
Any investment decisions taken by you should be based on your own analysis
and judgment (and/or that of your professional advisors) and not in reliance
on us or the Information.
This document does not explain all of the risks involved in investing in the
fund. No decision to invest in the fund should be made without rst reviewing
the prospectus, key investor information document and latest report and
accounts for the fund, which can be obtained from https://fundcentres.lgim.
com /.
This document has been prepared by Legal & General Investment
Management Limited and/or their aliates (‘Legal & General’, ‘we’ or ‘us’). The
information in this document is the property and/or condential information
of Legal & General and may not be reproduced in whole or in part or
distributed or disclosed by you to any other person without the prior written
consent of Legal & General. Not for distribution to any person resident in any
jurisdiction where such distribution would be contrary to local law or
regulation.
No party shall have any right of action against Legal & General in relation to
the accuracy or completeness of the information in this document. The
information and views expressed in this document are believed to be accurate
and complete as at the date of publication, but they should not be relied upon
and may be subject to change without notice. We are under no obligation to
update or amend the information in this document. Where this document
contains third party data, we cannot guarantee the accuracy, completeness
or reliability of such data and we accept no responsibility or liability
whatsoever in respect of such data.
This nancial promotion is issued by Legal & General Investment
Management Limited.
Legal and General Assurance (Pensions Management) Limited. Registered in
England and Wales No. 01006112. Registered Oce: One Coleman Street,
London, EC2R 5AA. Authorised by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority and the Prudential Regulation
Authority, No. 202202.
LGIM Real Assets (Operator) Limited. Registered in England and Wales, No.
05522016. Registered Oce: One Coleman Street, London, EC2R 5AA.
Authorised and regulated by the Financial Conduct Authority, No. 447041.
Please note that while LGIM Real Assets (Operator) Limited is regulated by the
Financial Conduct Authority, it may conduct certain activities that are
unregulated.
Legal & General (Unit Trust Managers) Limited. Registered in England and
Wales No. 01009418. Registered Oce: One Coleman Street, London, EC2R
5AA. Authorised and regulated by the Financial Conduct Authority, No.
119273.
© 2024 Legal & General Investment Management Limited, authorised and
regulated by the Financial Conduct Authority, No. 119272. Registered in
England and Wales No. 02091894 with registered oce at One Coleman
Street, London, EC2R 5AA.
Contact us
For further information about LGIM, please visit LGIM.com, email SolutionsDistribution@lgim.com or contact your usual LGIM representative
