Legal & General Property ('LGP') together with Legal & General Investment Management ('LGIM'), announce the successful launch of a new product, the Hybrid Property Fund (the 'Fund'), which offers Defined Contribution ('DC') pension schemes a new and innovative way to invest in property funds while managing volatility and liquidity.
Developed in conjunction with a major investment consultant, who requested an initial exclusivity period on the product until April 30 2011, the Fund invests in LGP's UK balanced fund (the Managed Property Fund) and LGIM's Global REITS Index Tracker Fund on a default position split of 70:30, respectively. As of May 2011 the fund is available to a number of other DC schemes and has already been selected by a major Life platform to provide its clients with global real estate exposure.
Providing a property allocation that has been specifically designed in conjunction with investment consultants to meet the optimum criteria of UK DC pension schemes, the Fund caters to the increasing long-term growth trend of DC. The combination of UK direct and global indirect funds provides greater diversification and liquidity, while reducing fund expenses and the entry and exit costs typically associated with direct property investment. Furthermore, in order to provide the ability to adapt to market movements, the Manager has the flexibility to alter the 70:30 default position of the Fund within pre-set benchmark ranges.
The Fund has been highly diversified from launch, providing incoming unit holders with access to pooled real estate investments with a combined value of £1.5 billion.
Established in 1971, the £1.1 billion Managed Fund is LGP's longest operating property fund. An actively managed, daily-priced, UK property fund which invests directly in freehold and leasehold properties, it also has a provision for up to 15% to be invested in indirect property vehicles and derivatives. The £470 million Global REITS Index Tracker Fund was launched by LGIM in 2006 and aims to provide global, diversified exposure to listed real estate equity markets around the world by tracking the FTSE EPRA/NAREIT Global Real Estate Index.
Michael Barrie, Director of Balanced Funds at Legal & General Property, comments: "Following the launch of the UK Property Income Fund, the LPI Fund and a number of other new and innovative products last year, this latest fund continues to showcase LGP's ability to respond quickly to changing market trends and satisfy investors' appetite for fresh products that are aligned to their core needs."
Pete Gladwell, Business Development Manager at Legal & General Property, adds: "The Fund has been designed to enable the growing market of DC pension schemes to gain access to property market returns, while providing them with enhanced diversification and liquidity. The levels of interest and seed investments that we have already received from investment consultants and DC platforms are a strong endorsement of the Fund's optimized structure and signify increasing appetite for innovative products."