Legal & General Investment Management America (LGIMA) has announced the launch of its US index fund management business.
According to the US arm of UK-based Legal & General Investment Management, the new venture would help further expand the firm’s footprint in America.
“Indexing is an important component in our sophisticated approach to implementing a cost effective and customized de-risking strategy for our pension and institutional clients,” Mike Craston, CEO of LGIMA, said in a statement.
The addition of the index business aligns with broad shifts in assets from active to passive management, said Chad Rakvin, LGIMA’s head of US index funds.
To prepare for the launch, the Chicago-based division took over $60 billion in pension assets from its parent company, doubling its total assets. In October, LGIMA also brought over two members from the UK team—Drew Miyawaki, head of global equity trading, and Aodhagán Byrne, index portfolio manager—to help lead the enterprise.
“LGIMA is in a growth mode and a key component is bringing talent to Chicago, and mobilizing our equities capabilities under one global desk,” Rakvin said. “The move to a global trading model will put our traders closer to the market and, more generally, supports our move to create a truly global index business.”
The firm’s CEO added the US index fund business would help provide a “level of service that is centered on transparency—free from those conflicts of interest.”
The asset manager’s move resembles the London Stock Exchange’s (LSE) recent purchase of Russell Investments’ index and investment management businesses.
LSE’s Chief Executive Xavier Rolet said in June the acquisition “sits squarely with [its] strategy… and provides another key driver of growth by growing [its] presence in the US, the largest global financial services market.”
By bringing together more than $5 trillion of benchmarked assets from Russell and $4 trillion of equities from LSE-owned index operator FTSE, the two firms said they hope to create a “[number] two player in US-listed exchange-traded funds.”
However, the future of Russell’s asset management business is unclear, with many industry experts speculating LSE would eventually sell the unit separately to a strategic buyer or a private equity firm.
Read more about the breakdown of the anatomy of Russell and what LSE might have in store for its asset management and consulting business.
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