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LGIM wins PPF mandate to run low volatility strategy

By , 23 Oct 15

Legal & General Investment Management (LGIM) has won a mandate from the UK’s Pension Protection Fund to implement a FTSE RAFI Low Volatility strategy for the statutory body.

Legal & General Investment Management (LGIM) has won a mandate from the UK’s Pension Protection Fund to implement a FTSE RAFI Low Volatility strategy for the statutory body.

The FTSE RAFI Low Volatility index, created by Research Affiliates in collaboration with index provider FTSE Russell, aims to increase risk-adjusted returns over the longer term by focusing on less volatile stocks.

The index is designed to break the link between portfolio weight and price by using fundamental measures of company size, and is based on research that shows it is possible to generate higher risk-adjusted returns for investors with a low volatility investment strategy.

LGIM said the FTSE RAFI Low Volatility mandate is the first of its kind in Europe.

“In times of economic turbulence the strategy is designed to give surety and meet specific performance criteria required by the PPF,” Adam Willis, Head of Index Fund Distribution at LGIM .

The Pension Protection Fund’s main function is to provide compensation to members of eligible defined benefit pension schemes, when there insolvency event in relation to the employer, and where there are insufficient assets in the pension scheme to meet its obligations.

Jason Hsu, co-founder and vice chairman, of Research Affiliates said: “All investors are different and have varying needs.  With many markets richly valued, some are looking for an efficient way to de-risk the equity exposures within their portfolios.

“For these investors, a low volatility approach—like the FTSE RAFI Low Volatility strategy—may make a lot of sense,” he said.

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International Adviser covers the global intermediary market that uses cross-border insurance, investments, banking and pension products on behalf of their high-net-worth clients. No news, articles or content may be reproduced in part or in full without express permission of International Adviser.