LGIM assets swell to record high
The funds arm of UK insurer Legal & General reported today that its assets under management had reached record levels, thanks to rising markets and flows into its fixed-income and liability-driven investment divisions. The results comes after Financial News revealed yesterday that the company is restricting investors from entering its flagship sterling corporate bond fund.
Legal & General Investment Management's assets stood at £311bn (€346bn) at the end of September, up 15% from £271bn at the end of June, according to its parent company's third quarter update published today.
The funds arm continued to enjoy positive flows in the third quarter with £4.2bn in net flows, continuing the trend from the first half of the year, when the company took in £7.9bn in net assets.
Over the first nine months of the year, LGIM's fixed-income and LDI divisions enjoyed a dramatic increase in net inflows compared with the same period last year. Investors placed a net £3.1bn into its fixed-income strategies, including cash, over the nine months, compared with a net £1.6bn last year. They put a net £2.7bn into LDI this year, compared with £1.7bn last year.
The news of strong demand for its bond strategies comes as asset managers continue to report substantial flows into their fixed-income funds. Financial News reported yesterday that LGIM is restricting investors from investing in its flagship sterling corporate bond fund after it swelled to more than £7bn, and is prioritising existing investors and avoiding accepting large amounts in any one month.
Other managers are talking with investment consultants about capacity, after investors put £8.8bn into sterling corporate bond funds in the past 12 months, according to the Investment Management Association. M&G Investments, the funds arm of UK insurer Prudential, reported net inflows of £11.1bn for the first nine months of the year last week.
LGIM said the fixed-income and LDI mandates generate higher margins than index-tracking funds, into which net flows shrank but still remained positive over the nine months. A net £17.1bn flowed into the company's index funds, 27% down from the £23.3bn placed last year. Investors put a net £1.4bn into its unit trusts, down from £1.7bn last year.
The update on the asset manager was part of its parent company's quarterly update. Tim Breedon, Legal & General's chief executive, said the group had exceeded its target set earlier this year, to generate £450m of net cash and £50m of annualised cost savings in 2009.
New business sales worldwide was down 7% to £1.1bn over the first nine months of the year, compared with the same period last year. The decline was blamed in part on a decline in pension buyout business - the number of deals closing in the third quarter was "low", in what is traditionally a quiet period for the sector, the group said. Over the first nine months of the year, new pensions buyout business was £79m, compared with £163m over the same period in 2008.
--Write to pcraig@efinancialnews.com
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