SICAV (UCITS compliant)

L&G Global Diversified Credit SDG Fund

Fund facts

Fund size
$380.8m
Base currency
USD
Launch date
9 Dec 2021
Domicile
Luxembourg
Share class launch

Statistics

Modified duration
4.44 years
Gross redemption yield (unhedged)
7.83%

As at 31 Oct 2022

Fund aim

The objective of the Fund is to provide a combination of growth and income by outperforming the Benchmark Index by 0.75% per annum, before the deduction of any charges and measured over rolling three-year periods. The Fund will generate investment return whilst excluding certain companies from the investment universe. The exclusion criteria applied is detailed in the investment policy.

There can be no assurance that the Fund will achieve its investment objective.

Benchmark

Composite

Composite benchmark consists of: 40% blended 50/50 benchmark comprising the JPM EMBI Global Diversified 3-5 Years Index (sovereign) and the JPM CEMBI Diversified 3-5 Years Index (corporate); 40% Bank of America Merrill Lynch Global High Yield BB-B Rated 2% Constrained Ex-Financial Index; and 20% Bloomberg Barclays USD/EUR/GBP Corporates 1% issuer capped.

  • What does it invest in? Invests predominately in fixed income securities, including bonds and other debt instruments, issued in a variety of currencies by companies and governments world wide.
  • How does it invest? Actively managed, investing in global diversified portfolio of fixed income securities include Emerging Markets high yield and credit debt. The fund will make use of derivatives for investment purposes or for efficient portfolio management.
  • Does it promote sustainability characteristics? The Fund promotes a range of environmental and social characteristics. Further information on how such characteristics are met by the Fund can be found in the Supplement.

Fund Managers

Matthew was appointed Head of Global Bond Strategies in September 2019. Prior to this he was co-head of the Euro credit portfolio management team, responsible for Euro-benchmarked and absolute return funds. He joined LGIM in March 2009 as a senior research analyst responsible for covering financial institutions and joined the Euro credit portfolio management team in February 2011. Prior to this Matthew spent three years as a Partner at Banquo Credit Management (a multibillion euro absolute return investment manager) and four years at UBS as Head of Financial Institutions Ratings Advisory. Matthew has more than 20 years’ experience in financial services and graduated from the University of York with a BA (hons) in English. He qualified as a chartered accountant with Coopers & Lybrand in 1996.

Tony became the head of quantitative strategies in the Global Bond Strategies team in 2015 with a primary focus on multi-strategy and absolute return mandates. Prior to this, he had overall responsibility for the quantitative work in LGIM's global credit team where he maintained and developed quantitative models used in trading and risk management. Tony joined LGIM in November 2010 from Credit Suisse Securities where he had a summer internship in the fixed income division. Previously, Tony worked for LGIM’s fixed income department from July 2009 to June 2010. Tony graduated with distinction from the London School of Economics with an MSc in finance in June 2009. He also has a bachelor’s degree from National University of Singapore.

MatthewRees

TonyFan

Sustainability

Sustainability disclosures

The Sustainable Finance Disclosure Regulation (SFDR) is an EU regulation that came into force on 10 March 2021, and imposes disclosure requirements for EU financial products. These requirements include disclosing sustainability-related information for funds that (i) promote (among other characteristics) environmental or social characteristics (Article 8 products), or (ii) have a sustainable investment objective (Article 9 products), both as defined under SFDR.

SFDR categorisation: Article 8Article 8: These funds promote environmental and/or social characteristics

The EU Taxonomy Regulation (EU Taxonomy) sets out a classification system in respect of environmentally sustainable economic activities. EU Taxonomy covers six environmental objectives, ranging from climate change mitigation to protection and restoration of biodiversity, with technical screening criteria to determine whether certain economic activities supports these objectives. EU Taxonomy recognises these economic activities as green, or “environmentally sustainable” if they make a substantial contribution to at least one of the environmental objectives, while at the same time not significantly harming any of these objectives and meeting minimum social safeguards. EU Taxonomy came into force on 1 January 2022 for the first two, climate-related, environmental objectives. EU Taxonomy also amends the disclosure obligations under SFDR to extend the information to be disclosed for Article 9 products and Article 8 products with an environmental focus. You will find the relevant disclosures under the ‘Pre-contractual disclosure’ tab.

The Fund promotes a range of environmental and social characteristics as described below. These characteristics are met by:

Decarbonisation
Net zero framework
Stock selection
Carbon intensity
Future World Protection List

The Future World Protection List captures companies failing to meet globally accepted business practices on sustainability, or our minimum requirements on the carbon transition. There are three components to the list:

  • Companies that derive 30% or more of their revenues (as a % of their balance sheet) from coal mining or extraction are excluded from the Fund.
  • Companies that are in breach of at least one of the United Nation Global Compact principles for a continuous period of three years (36 months) or more are considered persistent violators and are excluded.
  • Companies involved in controversial weapons are also excluded.

The FWPL is monitored on an on-going basis and updated semi-annually. In order to determine the list of companies included on the Protection List, we use data from a number of external ESG data providers.

Further information can be found at https://www.lgim.com/landg-assets/lgim/_document-library/capabilities/future-world-protection-list-public-methodology.pdf

Climate Impact Pledge

Companies are excluded from the Fund in accordance with our Climate Impact Pledge.

  • The Pledge maps out a large number of companies worldwide, in climate-critical sectors against key indicators. Using quantitative and qualitative measures, such companies are assessed under a traffic light system drawing on independent data providers and our pioneering climate modelling.
  • The Climate Impact Pledge engagement strategy sets expectations of companies in the coal value chain. Where these companies do not meet minimum requirements with regards to our climate strategy and action, we will vote against and may divest from the Fund.
  • The CIP is monitored on an on-going basis and updated annually.

Further information can be found at www.lgim.com/climate-impact-pledge

Exclusions

The fund will also exclude investments in bonds where a company derives more than 50% of its revenues from the production of tobacco.

Tilting
Paris-aligned benchmark optimisation
ESG integration

Our ESG integration encompasses both top-down and bottom-up approaches to identify and assess ESG factors in the research analysis process. The top-down research analysis identifies long-term, thematic shifts and structural changes which help determine the resiliency of sectors and the companies within them. The bottom-up analysis uses a proprietary, company analysis tool called Active ESG View which provides information on the ESG credentials of companies.

  • Our Active ESG View tool forms an essential component of this overall active research process. The tool brings together granular quantitative and qualitative inputs in order to reflect a full picture of the ESG risks and opportunities embedded within each company.
  • Active ESG View combines ESG raw data with qualitative assessment capturing ESG insights from our company analysis and engagements.
  • The ESG analysis starts with third-party data from multiple different vendors which includes hundreds of ESG metrics (including data on carbon emissions, water and waste, environmental policies and controls, labour, health and safety, bribery and corruption) spanning 64 specific sectors and/or sub-sectors from a number of ESG data providers.
  • Our Global Research and Engagement Groups (GREG), which is made up of Investment Stewardship and investment teams, have established a proprietary materiality matrix using such data which seeks to identify financially material topics for a given industry. The materiality matrix brings structure to our research and a framework to help systematically define and prioritise our engagement activity across the firm.
  • The GREGs review the ESG data within the Active ESG View tool for each sector in order to increase or decrease weightings for each environmental, social and/or governance factor within the tool with the aim to create an overall assessment.

Active ESG View is an integral feature of this fund and the outputs of Active ESG View must be taken into account for all investment decisions.

Active engagement is a vital pillar within our approach to ESG integration. In practice, the data alone may not tell the full story, which is why we believe that incorporating a qualitative element is essential in order to fully capture the ESG risks embedded within each company. Our qualitative inputs capture ESG insights leveraging on the extensive knowledge of our various research.

UN SDG alignment

Through LGIM’s proprietary UN Sustainable Development Goals (SDG) scoring process, which is produced using data from Sustainalytics, Rep Risk, Bloomberg and Internal LGIM data, LGIM is able to assess the extent to which a company or sovereign positively contributes to, or detracts from, the SDGs by analysing revenue streams and business practices for companies and primarily human rights and gender equality credentials for sovereigns. For example, a company may positively contribute to one or more of the SDG’s where its sources of revenue have a positive impact (e.g. production of energy from renewable sources), or there is a positive contribution from company practices within day to day operations (e.g. sustainable sourcing of suppliers).

LGIM uses the UN SDG scoring process as a forward-looking indicator at the sector level to assess and determine whether a company’s or sovereign’s alignment to the SDGs is (i) positive, (ii) negative, or (iii) neutral. Companies and/or sovereigns that demonstrate a negative alignment to one or more of the SDGs will be excluded from the portfolio. Integrating SDGs forms part of LGIM’s approach to assess the long-term sustainability of a company through its revenue generation and sustainable business practices (programmes and policies).

A description of the extent to which the environmental and social characteristics, or sustainable investment objectives where relevant, have been met is available as part of the annual report as required by SFDR.

Pre-contractual disclosure

SFDR Disclosure

The Fund promotes a range of environmental and social characteristics. The Fund seeks to meet these characteristics by;

(i) investing in bonds and bond related instruments issued by companies which meet the Investment Manager’s core pillars of ESG integration (as further described below); and

(ii) excluding investments in bonds issued by companies that generate 30% or more of their revenues from mining and extraction of thermal coal. For the avoidance of doubt, the exclusion is at the corporate entity level only and will not include group or subsidiary companies; nor does it include metallurgical coal. A summary of the Investment Manager’s coal exclusion policy is available on request.

iii) excluding companies from the investment universe in accordance with the Investment Manager’s climate impact pledge (the “Climate Impact Pledge”). The Pledge maps out a large number of companies worldwide, in climate-critical sectors against key indicators. Using quantitative and qualitative measures, such companies are assessed under a traffic light system drawing on independent data providers and the Investment Manager’s pioneering climate modelling. A summary of the Investment Manager’s Climate Impact Pledge is available at: www.lgim.com/climate-impact-pledge.

iv) The fund will also exclude investments in bonds where a company derives more than 50% of its revenues from the production of tobacco.

v) Through LGIM’s proprietary UN Sustainable Development Goals (SDG) scoring process, LGIM is able to assess the extent to which a company or sovereign positively contributes to, or detracts from, the SDGs by analysing revenue streams and business practices for companies and primarily human rights and gender equality credentials for sovereigns. For example, a company may positively contribute to one or more of the SDG’s where its sources of revenue have a positive impact (e.g. production of energy from renewable sources), or there is a positive contribution from company practices within day to day operations (e.g. sustainable sourcing of suppliers).

LGIM uses the UN SDG scoring process as a forward-looking indicator at the sector level to assess and determine whether a company’s or sovereign’s alignment to the SDGs is (i) positive, (ii) negative, or (iii) neutral. Companies and/or sovereigns that demonstrate a negative alignment to one or more of the SDGs will be excluded from the portfolio. Integrating SDGs forms part of LGIM’s approach to assess the long-term sustainability of a company through its revenue generation and sustainable business practices.

vi) Evaluating positive ESG factors is an integral part of the Fund’s investment process. The Investment Manager’s integrated framework for responsible investing across both public and private assets is primarily based on stewardship with impact and collaborative active research across asset classes. As part of the investment research process, material ESG factors are identified using both top-down and bottom-up approaches. The top-down research analysis performed by the Investment Manager’s sector experts, in conjunction with its investment stewardship teams; help determine the resiliency of sectors and the companies within them. ESG factors are also fully embedded into the bottom-up research process which involves evaluating the ESG credentials of companies that the Investment Manager considers for investment, alongside traditional financial metrics. The Investment Manager has developed a proprietary research tool called ESG Active View which brings together these granular quantitative and qualitative inputs by evaluating sector-specific ESG factors. The ESG Active View provides an overview of how companies manage potential, sector-specific ESG risks and opportunities, so that these can be considered alongside all other components of fundamental investment analysis.

In addition to the above, active engagement with the issuers is used as a tool to drive progress and influence positive change and is conducted independently and in collaboration with industry peers and broader stakeholders. Engagement activities normally focus on specific material ESG issues and involve formulating an engagement strategy with regard to such issues with the aim to track and review the progress of the issuers during this process. The Investment Manager also provides regular reporting on the outcomes of its engagement. This can be made available on request or can be found at: www.lgim.com. Together, these activities enable the Investment Manager to conduct engagement that drives positive change and to deliver integrated investment solutions

The Investment Manager finally aims to ensure that (where applicable) the issuers in which the Fund is invested follow good governance practices by 1) setting its expectations with issuers' management with regard to good governance practices; 2) actively engaging with the issuers; and 3) supporting policymakers and legislators to ensure there is strong regulation and standards.

Governance practices

The ways in which we ensure that investee companies follow good governance practices are set out below.

Setting expectations

A number of policies and processes guide the engagement activities, set out the approach to investment stewardship, and outline the expectations of investee issuers. The Global Corporate Governance and Responsible Investment Principles set out the approach and expectations with respect to key topics that are essential for an efficient governance framework, and for building a sustainable business model. We expect all issuers on a global scale to closely align with our principles which set out the fundamentals of corporate governance. We also take into account market specificities and take a tailored approach to voting on some topics in various markets. Further related policies can be found on the Investment Stewardship section of the LGIM website.

Active engagement

Active engagement with the issuers is used as a tool to drive progress and influence positive change and is conducted independently and in collaboration with industry peers and broader stakeholders. Engagement activities normally focus on specific material ESG issues and involve formulating an engagement strategy with regard to such issues with the aim to track and review the progress of the issuers during this process.

Voting
Supporting policymakers and legislators

LGIM's Investment Stewardship team actively engages with policy makers and legislators to ensure there is strong regulation and standards in regards to governance practices.

Literature

Marketing documents

Trading information

Prices

This share class is not currently pricing.
This share class is not currently pricing.
This share class is not currently pricing.
This share class is not currently pricing.
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Further details

Costs

Price basis
Single swing
Initial charge
0.00%
Ongoing charges figure
0.43%
Dilution adjustment
0.696%- round trip
Swing factor
0.348%

Codes

ISIN
LU2383325169
SEDOL
BMCP7K5
Bloomberg
LGDCSIU LX
MEX
-

Dealing information

Valuation frequency
Daily, 23:00 CET
Dealing frequency
Each Business Day
Settlement period
T+3
Administrator/Custodian
Northern Trust

Country registration

This share class is registered for sale in the following countries:

For valuations and account queries contact:

Legal & General (Unit Trust Managers) Limited
PO Box 6080
Wolverhampton
WV1 9RB
Tel : 0370 050 0955
Email: [email protected]

Legal & General ICAV
LGIM Liquidity Funds Plc

Northern Trust International Fund Administration Services (Ireland) Limited
City East Plaza - Block A
Towlerton
Ballysimon Road
Limerick
Ireland
V94 X2N9
Fax: +353 1 434 5293
Telephone: +353 1 434 5080
Email: [email protected]

Legal & General SICAV
Northern Trust Global Services SE
10 Rue du Château d'Eau
L-3364 Leudelange
Grand-Duché de Luxembourg
Facsimile: +352 28 294 454
Telephone: +352 28 294 123
Email: [email protected]

Key risks

The value of an investment and any income taken from it is not guaranteed and can go down as well as up, you may not get back the amount you originally invested.

Past performance is no guarantee of future results.

This fund holds bonds that are traded through agents, brokers or investment banks matching buyers and sellers. This makes the bonds less easy to buy and sell than investments traded on an exchange. In exceptional circumstances the fund may not be able to sell bonds and may defer withdrawals, or suspend dealing. The Directors can only delay paying out if it is in the interests of all investors and with the permission of the fund depositary.

The fund invests directly or indirectly in bonds which are issued by companies or governments. If these companies or governments experience financial difficulty, they may be unable to pay back some or all of the interest, original investment or other payments that they owe. If this happens, the value of the fund may fall.

Prices of the ABS/MBS may be volatile, and will generally fluctuate due to a variety of factors that are inherently difficult to predict. In addition, the terms of the ABS/MBS may restrict its sale in particular circumstances.

This fund invests in countries where investment markets are considered to be less developed. This means that investments are generally riskier than those in developed markets because they: may not be as well regulated; may be more difficult to buy and sell; may have less reliable arrangements for the safekeeping of investments; or may be more exposed to political and taxation uncertainties. The value of the fund can go up or down more often and by larger amounts than funds that invest in developed countries, especially in the short term.

The fund could lose money if any institution providing services such as acting as counterparty to derivatives or other instruments, becomes unwilling or unable to meet its obligations to the fund.

Derivatives are highly sensitive to changes in the value of the asset on which they are based and can increase the size of losses and gains. The impact to the fund can be greater where derivatives are used in an extensive or complex way.

The fund may have underlying investments that are valued in currencies that are different from sterling (British pounds). Exchange rate fluctuations will impact the value of your investment. Currency hedging techniques may be applied to reduce this impact but may not entirely eliminate it.

We may take some or all of the ongoing charges from the fund's capital rather than the fund's income. This increases the amount of income, but it reduces the growth potential and may lead to a fall in the value of the fund.

Investment returns on bonds are sensitive to trends in interest rate movements. Such changes will affect the value of your investment.

Important information

This information is intended for investment professionals only and is for information purposes only. It should not be distributed without our permission.

No investment decisions should be made without first reviewing the key investor information document and prospectus (and any supplements thereto) of the relevant product which includes information on certain risks associated with an investment.

Unless otherwise agreed in writing, the Information on this website (a) is for information purposes only and we are not soliciting any action based on it, and (b) is not a recommendation to buy or sell securities or pursue a particular investment strategy; and (c) is not investment, legal, regulatory or tax advice. Any trading or investment decisions taken by you should be based on your own analysis and judgment (and/or that of your professional advisers) and not in reliance on us or the Information.

This information is only directed at investors resident in jurisdictions where each fund is registered for sale. It is not an offer or invitation to persons outside of those jurisdictions. We reserve the right to reject any applications from outside of such jurisdictions.

All information detailed on this website is current at the time of publication and may be changed in the future.

Source and third party data

Source: Unless otherwise indicated all data contained on this website is sourced from Legal & General Investment Management Limited.

Where this document contains third party data ('Third Party Data’), we cannot guarantee the accuracy, completeness or reliability of such Third Party Data and accept no responsibility or liability whatsoever in respect of such Third Party Data

Issuer

Issued by Legal & General Investment Management Limited as promoter and distributor for this fund in the UK.

Legal & General Investment Management Limited has been appointed as the discretionary investment manager for these Funds and is Registered in England and Wales No. 02091894. Registered Office: One Coleman Street, London, EC2R 5AA, United Kingdom. Authorised and regulated by the Financial Conduct Authority, No. 119272.