Already popular with advisers for its market-leading Multi-Index fund range and popular Multi-Asset funds, the launch of LGIM’s MPS range in 2021 had been eagerly anticipated. But has it lived up to expectations? We get the views of three leading members of the LGIM MPS fund management team about the story so far and why they believe they’ve got the right formula in place for long-term performance.
Building a well-diversified portfolio that can deliver on its objectives is the key aim of any fund manager – especially those charged with the management of model portfolios. To do so successfully takes a wealth of knowledge and expertise, particularly in times of economic and market turbulence like that we have experienced over the past three years.
But there’s more to it than that. Of course, to remain steadfast, and even continue to achieve performance goals during periods of uncertainty, is both a sign of a resilient portfolio and a testament to those individuals, the strategies and processes that underpin the all-important investment decisions.
However, it is paramount that advisers can identify those fund managers and appropriate investment strategies in times of uncertainty and prosperity to deliver on their clients’ all-important goals over the long term.
In this exclusive interview with Aimee Bowkett, James Giblin and Francis Chua, three of the key fund managers behind Legal and General Investment Management (LGIM)’s MPS range, IFA Magazine talks to the trio about the portfolios, about the importance of working in partnership with advisers, and why they believe that putting clients’ needs first is key.
In the following Q&A, we discuss why the MPS range was launched, explore the important investment strategies underpinning it, where it may be heading in the future and how it stands out in a crowded market. We also explore with Aimee, James and Francis why they believe that their work on LGIM’s MPS range has resulted in a resolute investment proposition that has gone from strength to strength in the three years since its launch. And why, when it comes to providing robust MPS solutions, size really does matter.
IFA Magazine: Why did you decide to launch the MPS range back in 2021?
Reflecting back to the launch of the LGIM MPS, Aimee Bowkett, makes it clear that this was very much about playing to LGIM’s existing strengths within the team as she comments: “We launched our Model Portfolio Service in September 2021, three years ago now, and this was really off the back of client demand.
“We had substantially grown our presence within the wholesale market with our successful Multi-Index fund range and when speaking to advisers we realised there was demand for something similar in the model portfolio space. e MPS market was seeing rapid growth and has continued to do so, especially given the increasing demand from advisers to outsource investment decisions.
“This was something we wanted to be able to offer to clients and we believed were ideally placed to do so. Launching our MPS range was a natural progression for us. It has complemented our unitised multi-asset funds and completed our full suite of wholesale solutions. It’s enabled us to offer our services to a wider segment of the market and essentially cater for all the different client types and requirements which is so important to us.”
Lifting the lid on their proposition, Francis Chua added: “As Aimee just pointed out, we built our MPS proposition around the same sound philosophy and process that has worked so well for our multi-index clients. It has also leveraged our significant manager research expertise, which we have over a decade of experience in with our long-standing Multi-Manager Funds. Having this expertise within the team enabled us to build a full range of core model portfolio solutions, including Index, Blended, ESG and Income.”
When it comes to LGIM’s range of MPS solutions, the team are very aware that success is about more than just offering a product, it’s about putting clients’ needs right at the heart of the proposition as James Giblin explains: “We’re committed to helping both advisers and their clients, by offering a full suite of core model portfolios. A large part of the growth for us has also been in building strategic partnerships and offering tailored model portfolios to help meet the specific needs of advisers’ clients. We fully understand how and why service is such a key part of model portfolios, and we really value the partnerships that we have built as they continue to help us develop our offering.”
IFA Magazine: How do you differentiate yourselves in an already competitive MPS marketplace? What’s the LGIM USP?
For James Giblin, it’s clear that there are many USPs: “We are fortunate to be part of Legal & General – one of the most recognised and trusted consumer financial brands in the UK – which we believe offers significant peace of mind, for financial advisers and their clients alike” says Giblin. “Many of the advisers that we work with have found that being able to talk to their clients about their partnership with us as a UK household name has resonated positively with their clients and enhanced their own brand into the process.”
“It’s also been a busy period of consolidation within the market with many firms seeing a change in ownership. I believe that our position of strength in the market as the UK’s largest asset manager provides an element of stability for clients which is so important.”
“One of the key issues for advisers in today’s market, which model portfolios help to address, is the growing workload for advisers due to evolving regulation; and as such the adviser community increasingly need to be able to outsource investment decisions to a trusted MPS provider. Our goal is to help relieve that burden, by working with advisers to understand what they need and build investment solutions that help meet their clients’ long-term objectives.”
“And then there’s cost of course. As a ‘manufacturer of index’ we can significantly reduce costs for advisers’ clients. These capabilities enable us to run portfolios from just 0.13% with a DFM fee from just 0.06%. We can do this, while offering significant expertise in index management, trading and risk management.”
When it comes to the investment proposition itself there are advantages here too as Francis Chua makes clear saying: “As well as that strong brand name that James mentioned, our intention is to bring an institutional approach to managing model portfolios to a part of the market that’s historically been dominated by wealth managers.
“Why is that important? Well, we think that within multi-asset investing, size really does matter. The investment universe is, by definition, infinitely large and being part of a wider team allows us to take a specialised approach to managing portfolios. We also believe that adding genuine alpha as an active manager is hard. Therefore, rather than having a smaller team trying to cover everything from fixed income to equities to currencies but not really having an edge in any area, we rely on experts that each have a real depth of knowledge within their narrow area of expertise to improve our chances of finding an edge within the market.
“Within our multi-asset team here at LGIM, we are fortunate to have over 40 investment professionals including 5 economists and over 10 strategists. We can also draw on wider business expertise from other teams, working in areas such as active global credit, emerging market debt and high yield, and active equities which we believe is unique in the MPS world.
“Underpinning all this is our understanding of the importance of building a solid foundation for our investment solutions. As we all know only too well, any smart active allocation calls can easily be wiped out by a poorly thought-out strategic asset allocation. This is where we can utilise the same modelling techniques that we employ within our pension mandates to create sensible portfolio allocations that aim to maximise risk-adjusted returns for MPS investors.
“Ultimately, we think that both advisers and their clients want solid returns over the long term, but just as important is to avoid significant periods of weak underperformance. We believe our robust and detailed approach to asset management provides a good opportunity to achieve this.”
IFA Magazine: Reflecting on the last three years since launch, what would you say are the standout achievements for the team and what are your goals moving forward?
“We’re very excited and proud about what we’ve achieved so far but we’re also very much looking forward to the future,” says James Giblin.
“When you think of the market environment we’ve been through, sometimes it is easy to forget just how difficult it has been. We had the COVID-19 pandemic, the return of inflation globally and not to mention geopolitics too.
“It’s hard to look at the last three years and point to one defining moment that drove asset prices. They all did it in their own way. And in that backdrop, as we come up to our three-year anniversary, it is really pleasing to see the performance of our MPS portfolios come out as it has.
“As advisers and clients reflect on and assess our performance over this time period, it is great for us to feel that we have delivered on what we aimed to do. We believe it’s set us up perfectly to continue to deliver in future.”
Drilling down into what they’ve done as a team and how they’ve done it, Francis Chua added: “Yes and looking ahead, we’re confident we can continue to build on our achievements to date.
“Our MPS follows the same repeatable investment process that is more than ten years old, that also drives our multi-index and multi-manager funds. Our investment process has been tested throughout a variety of different environments; post-global financial crisis, low-inflation, the pandemic, high-inflation, high concentration etc. Coming back to the point earlier about institutional asset management, as the portfolio managers we are lucky to have a wide range of support behind us to help us deliver on our investment objectives.
“Today the market favours concentration and momentum, tomorrow it will be something else. We know that over the long term, investors want consistency, and we aim to deliver on that by staying actively diversified through any form of market turbulence. We’ve done that for our portfolios in the last three years and will continue to do that going forward.”
While the last three years have brought many successes for LGIM and its MPS range, Aimee Bowkett points out that there have still been some useful lessons learned along the way as she comments: “MPS is a competitive marketplace, with some great teams and products out there for advisers to choose from. Against that backdrop, we’re very pleased that we have something different and relevant to offer. I think that it’s hard to overstate how important that is. In a maturing and competitive market such as MPS, it is far too easy to simply offer what might be popular right now, rather than to focus on a longer-term goal.
“For us, the longer-term goal is key. Ultimately, it comes down to being the trusted stewards of our clients’ assets, to grow those underlying assets in a diversified and managed fashion. This sounds very cliched but we firmly believe that if you put clients at the centre of your investment strategy, then success will follow. That has been a key lesson for us in the last three years: listening to our clients. MPS isn’t just a product, it is also a partnership. Speaking about partnerships, we’ve seen meaningful client milestones in that time too with our Richmond and Apollo About Francis Chua – Fund Manager Francis is a multi-asset fund manager within LGIM’s Asset Allocation team. As a key member of the Asset Allocation team, he oversees a diverse portfolio of retail multi-asset funds, including the award winning Multi-Index range, LGIM’s Model Portfolio Service and the Multi-Manager funds, where he serves as the lead fund manager. Francis previously worked at Aviva, where he specialised in implementing investment strategies with a focus on financial risk management, investment manager selection and in-depth asset class research. Francis is a graduate of the University of Warwick and is both a Fellow of the Institute and Faculty of Actuaries as well as a CFA charter holder. partnerships, and it really comes down to designing what the client wants.
“The other lesson we’ve learned is not losing focus through all the ‘noise’ which goes on in the markets. A key position that we’ve held and continue to hold in our portfolios is on duration, on holding bonds. Bond values have fluctuated dramatically in recent years, and it could be tempting to discount the role that bonds can play in portfolios, based on short-term factors. We aim to take a longer-term view and balance our view across fundamentals, market dynamics and valuation factors. When there’s a lot of noise, as there currently is with bonds, we’ve learnt and reaffirmed the importance of staying true to our investment approach. As we’ve seen recently in markets, bonds can offer significant diversification benefits to balance the riskier assets in a portfolio.
“It sounds simple enough, but it is so important to recognise the value of maintaining a diversified portfolio, and to stick to it when times get tough. We balance our view across fundamentals, market dynamics and valuation factors. It’s a strategy that’s worked very well for us in the past and we’re confident that this will continue to be the case in the future so we can keep on seeking to deliver for our investors.”
1 View the list of awards won by the multi-asset team. Awards should not be considered a recommendation. Past performance is not a guide to the future.
2 Source: LGIM internal data as at 30 June 2024.
Click here to learn more about LGIM’s MPS service
About Francis Chua – Fund Manager
Francis is a multi-asset fund manager within LGIM’s Asset Allocation team. As a key member of the Asset Allocation team, he oversees a diverse portfolio of retail multi-asset funds, including the award winning Multi-Index range, LGIM’s Model Portfolio Service and the Multi-Manager funds, where he serves as the lead fund manager. Francis previously worked at Aviva, where he specialised in implementing investment strategies with a focus on financial risk management, investment manager selection and in-depth asset class research. Francis is a graduate of the University of Warwick and is both a Fellow of the Institute and Faculty of Actuaries as well as a CFA charter holder.
About James Giblin – Fund Manager
James is responsible for managing a range of retail multi-asset funds, including a number of client model portfolios as part of LGIM’s Model Portfolio Service (MPS). He joined LGIM from LGT Wealth Management where he was a portfolio manager on the Model Portfolio team. James is a member of the Manager Research Group (MRG), with a focus on alternative investments. James graduated from the University of Nottingham and holds a Bachelor of Science degree in Economics. James is a CAIA (Chartered Alternative Investment Analyst) charterholder as well as a CISI Chartered Wealth Manager.
About Aimee Bowkett – Fund Manager
Aimee is a Fund Manager for LGIM’s Asset Allocation strategies, responsible for the portfolio management of the Model Portfolio Service, as well as working on LGIM’s Multi-Manager Funds. Aimee is a member of the Manager Research Group (MRG), covering the manager research for several asset classes. Aimee joined LGIM in 2016, originally as an Investment Specialist within the Multi-Asset Funds team where she focused on the team’s retail proposition. Previously, she worked at AXA Investment Managers as a fixed income product specialist.
Click here to learn more about LGIM’s MPS service
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