In a push into the growing outsourcing market, Legal & General Investment Management (LGIM) has launched a “Buyout Aware” service for UK clients.
The service will centre on three elements: a combination of LGIM’s liability-driven investment (LDI) capabilities; tracking buyout prices using the company’s insurance and bulk annuity arms; and a “default transaction cost of zero” L&G buyout, if desired by the client.
The service should allow pension managers to take control of their endgame objectives, which may be either self-sufficiency or buyout, according to the Aaron Meder, head of LGIM’s solutions group.
Meder said the service combined the “building blocks” already present within LGIM’s arsenal.
Pensions using the service would invest in a bespoke blend of LGIM corporate bond and liability matching funds, with the outsourcing coming into play as the company uses its expertise across LDI, active fixed income, index, and managing insurance assets generally.
Meder said pensions would be invested in a range of four funds—with a combination of real and nominal targets—that each had different durations. Using a combination of these funds would mean investors would end up with a bespoke product for their needs.
The service may leverage LGIM’s position as the largest LDI provider in the UK. The company has a 44% market share, with around 3,000 clients on its books.
It is the first time the company has explicitly labelled a service as an outsourced product. Meder said the decision had been taken due to increased demand for a “holistic matching solutions” from its clients.
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