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Legal & General Future World ESG Developed Index Class C - Accumulation (GBP)

Sell:94.09p Buy:94.09p Change: 1.66p (1.80%)
Prices as at 22 November 2024
Sell:94.09p
Buy:94.09p
Change: 1.66p (1.80%)
You can buy or sell holdings in this fund through a Stocks and Shares ISA, Lifetime ISA, SIPP or Fund and Share Account
Prices as at 22 November 2024
Sell:94.09p
Buy:94.09p
Change: 1.66p (1.80%)
Prices as at 22 November 2024
You can buy or sell holdings in this fund through a Stocks and Shares ISA, Lifetime ISA, SIPP or Fund and Share Account
The selling price currently displayed is higher than the buying price. This can occur temporarily for a variety of reasons; shortly before the market opens, after the market closes or because of extraordinary price volatility during the trading day.

Our view on this Fund

This fund is on the Wealth Shortlist of funds our analysts believe have the potential to outperform their peers over the long term. However, this is not a recommendation to buy.

We think this fund is a good option for broad exposure to global stock markets, while being mindful of environmental, social and governance (ESG) issues.

An index tracker fund is one of the simplest ways to invest, and we think this fund could be a good addition to a broader investment portfolio aiming to deliver long-term growth in a responsible way. It could also be a good addition to a portfolio of other tracker funds.

Our view on the sector

It's natural for UK investors to focus on funds investing in their home market. But as the world has become more connected, so has the investment landscape. There are lots of funds investing across the globe, and these can be a great way to diversify an investment portfolio. Funds in the global sector can invest anywhere in the world. But they go about this in different ways. They vary in how much they can invest in certain types of companies, sectors, countries, or regions. Some focus on developed markets or large multinational corporations, while others invest more in higher-risk emerging markets or smaller companies. Some target companies with higher-growth expectations and others search for unloved companies with the potential to recover.

Performance Analysis

The fund's tracked its index well since launch in April 2019. Over the long run, we'd expect the fund's performance to fall behind the index due to the costs involved. This is typical of all tracker funds. The tools used by the managers have helped to keep performance close to the index and reduced the tracking difference.

If we compare the fund’s performance against the broader global stock market, the fund’s exclusion list and tilting mechanism could cause performance to be different.

The fund has a relatively short track record, but Legal & General’s team has a longer one managing a range of other tracker funds. Due to their size, experience and expertise running index tracker funds, we expect the fund to continue to track the index well in future, though there are no guarantees.

Investment Philosophy

Legal & General has become synonymous with passive funds and is one of the largest providers of index funds in the UK. It has around £482bn invested in this part of the business, allowing it to offer a wide range of index-tracking options. It has also built a team of experienced index tracker fund specialists.

We admire Legal & General's commitment to encouraging good corporate practices among the companies it invests in. It proactively engages with businesses and uses proxy voting rights to highlight important matters like environmental, social and governance (ESG) issues.

Legal & General's Future World range of funds incorporates its ‘Climate Impact Pledge’, which is its commitment to assess and engage with around 1,000 of the world’s largest companies on how well they manage the implications of climate change. Companies that consistently show a lack of awareness of climate change, and do not respond positively to engagement, are sold from the Future World funds.

Process and Portfolio Construction

This fund aims to track the performance of the Solactive Legal & General Enhanced ESG Developed Markets Index. It's made up of around 1,400 companies across developed markets, like the US, Japan and the UK, and diversified across lots of sectors. The team would preferably invest in every company in the index and in the same proportion. However, this is not always possible because it's difficult to buy and sell the smallest companies quickly or at low cost, which could ultimately impact performance. This is known as partial replication.

The fund does still invest in some smaller companies, which are usually subject to more extreme price movements, and this can increase risk.

The fund won't invest in direct violators of the UN Global Compact Principles (a UN pact on human rights, labour, the environment and anti-corruption) and companies that earn more than 10% of their revenues from tobacco. It also excludes companies that are involved in controversial weapons (such as cluster munitions, anti-personnel mines and chemical and biological weapons) and those that derive a significant amount of revenue from military and assault weapons.

The fund's exclusions include companies that earn more than 20% of their revenues from the mining and power generation of thermal coal and those involved in its expansion. It also excludes companies that derive more than 5% of their revenue from oil sands.

The index increases investments in companies that score well on a variety of ESG criteria - from the level of carbon emissions generated, to the number of women on the board and the quality of disclosure on executive pay. It also reduces exposure to companies that score poorly on these measures.

The advantage of reducing investments in poorly-scoring companies, rather than selling their shares completely, is that the Legal & General team can engage with poorly-scoring companies to help them improve. An increased investment in exchange for improvement on various factors is a good incentive, so investors' money could make a positive difference.

The fund also adopts a decarbonisation pathway. This means it aims to reduce emissions by 50% relative to the unadjusted benchmark as at 2021 and thereafter achieve at least a 7% reduction in carbon emissions per year until 2050. The goal is to align the fund with the Paris Agreement, which aims to limit the temperature rise caused by global emissions to 1.5 degrees celsius above pre-industrial times. We think this is a positive step overall, but it increases the fund's complexity.

question mark Manager Track Record Based on HL Quantitative Research

This information is currently unavailable.

Fund Track Record

22/11/19 to 22/11/20 22/11/20 to 22/11/21 22/11/21 to 22/11/22 22/11/22 to 22/11/23 22/11/23 to 22/11/24
Annual return n/a 28.80% -8.71% 11.12% 26.55%

Please remember past performance is not a guide to future returns. Where no data is shown, figures are not available. This information is provided to help you choose your own investments, remember they can fall as well as rise in value so you may not get back the original amount invested.

Information about the fund

Fund manager biography

manager photo
Manager Name: LGIM Index Fund Management Team
Manager start date: 30 September 2013
Manager located in: London

The Index Fund Management Team comprises 25 fund managers, supported by two analysts. Management oversight is provided by the Global Head of Index Funds. The Team has average industry experience of 15 years, of which seven years has been at LGIM, and is focused on achieving the equally important objectives of close tracking and maximising returns

Data policy - All information should be used for indicative purposes only. You should independently check data before making any investment decision. HL cannot guarantee that the data is accurate or complete, and accepts no responsibility for how it may be used. Benchmark data provided subject to this disclaimer.
You can buy or sell holdings in this fund through a Stocks and Shares ISA, Lifetime ISA, SIPP or Fund and Share Account