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Legal & General Future World ESG UK Index Class C - Income (GBP)

Sell:60.80p Buy:60.80p Change: 0.09p (0.15%)
Prices as at 15 July 2024
Change: 0.09p (0.15%)
You can buy or sell holdings in this fund through a Stocks and Shares ISA, Lifetime ISA, SIPP or Fund and Share Account
Prices as at 15 July 2024
Change: 0.09p (0.15%)
Prices as at 15 July 2024
You can buy or sell holdings in this fund through a Stocks and Shares ISA, Lifetime ISA, SIPP or Fund and Share Account
The selling price currently displayed is higher than the buying price. This can occur temporarily for a variety of reasons; shortly before the market opens, after the market closes or because of extraordinary price volatility during the trading day.

Our view on this Fund

This fund is on the Wealth Shortlist of funds our analysts believe have the potential to outperform their peers over the long term. However, this is not a recommendation to buy.

We think this fund is a good option for broad exposure to the UK stock market, while being mindful of environmental, social and governance (ESG) issues.

An index tracker fund is one of the simplest ways to invest, and we think this fund could be a great low-cost starting point for a portfolio aiming to deliver long-term growth in a responsible way. It could also be a good addition to a portfolio of other tracker funds.

Our view on the sector

The UK stock market is home to lots of world-class companies. From international giants to a diverse array of smaller businesses. This provides a rich hunting ground for fund managers in this sector. They all try to grow investors' money over the long term, but each goes about it in a different way. Some focus on larger companies in the FTSE 100 index, others invest in medium-sized or smaller companies, and some have the flexibility to invest in any company, regardless of size. Some aim to match or deliver a return similar to the broader UK stock market. Others have the freedom to try and make as much money as possible for investors and take more risks. That could mean investing in only a small number of companies, for instance. A fund that invests in UK shares is normally the first port of call for UK-based investors. But with such a variety on offer, investors should make sure a fund is right for their circumstances before investing.

Performance Analysis

The fund's tracked its index well since launch in April 2019. Over the long run, we'd expect the fund to fall behind its benchmark because of the costs involved in running the fund. Although that's to be expected from all tracker funds. The techniques used by the managers have helped to keep performance close to the index and reduced the tracking difference.

Due to the exclusions and tilting mechanism within the fund, we would expect its performance to differ slightly from the broader UK stock market.

The fund has a relatively short track record, but Legal & General's team has a longer one managing a range of other tracker funds. Their size, experience and expertise running index tracker funds gives us confidence the fund will track its index tightly and efficiently over the long term, although there are no guarantees.

Investment Philosophy

Legal & General has become synonymous with passive funds and is one of the largest providers of index funds in the UK. It has around £482bn invested in this part of the business, allowing it to offer a wide range of index-tracking options. It has also built a team of experienced index tracker fund specialists.

We admire Legal & General's commitment to encouraging good corporate practices among the companies it invests in. It proactively engages with businesses and uses proxy voting rights to highlight important matters like environmental, social and governance (ESG) issues.

Legal & General's Future World range of funds incorporates its Climate Impact Pledge, which is its commitment to assess and engage with around 1,000 of the world's largest companies on how well they manage the implications of climate change. Companies that consistently show a lack of awareness of climate change, and do not respond positively to engagement, are sold from the Future World funds.

Process and Portfolio Construction

This fund aims to track the performance of the Solactive Legal & General Enhanced ESG UK Index. It's made up of nearly 300 companies spread across the whole of the UK market, including the consumer staples, financials and energy sectors. The fund invests in the same companies as the index and in the same proportion. This is known as full replication and helps the fund closely match the performance of the benchmark.

The fund therefore invests in smaller companies in line with the benchmark, which are usually subject to more extreme price movements, and this can increase risk.

The fund won't invest in direct violators of the UN Global Compact Principles (a UN pact on human rights, labour, the environment and anti-corruption) and companies that earn more than 10% of their revenues from tobacco. It also excludes companies that are involved in controversial weapons (such as cluster munitions, anti-personnel mines and chemical and biological weapons) and those that derive a significant amount of revenue from military and assault weapons.

The fund's exclusions include companies that earn more than 20% of their revenues from the mining and power generation of thermal coal and those involved in its expansion. It also excludes companies that derive more than 5% of their revenue from oil sands.

The index increases investments in companies that score well on a variety of ESG criteria - from the level of carbon emissions generated, to the number of women on the board and the quality of disclosure on executive pay. It also reduces exposure to companies that score poorly on these measures.

The advantage of reducing investments in poorly-scoring companies, rather than selling their shares completely, is that the Legal & General team can engage with poorly-scoring companies to help them improve. An increased investment in exchange for improvement on various factors is a good incentive, so investors' money could make a positive difference.

The fund also adopts a decarbonisation pathway. This means it aims to reduce emissions by 50% relative to the unadjusted benchmark as at 2021 and thereafter achieve at least a 7% reduction in carbon emissions per year until 2050. The goal is to align the fund with the Paris Agreement, which aims to limit the temperature rise caused by global emissions to 1.5 degrees celsius above pre-industrial times. We think this is a positive step overall, but it increases the fund's complexity.

question mark Manager Track Record Based on HL Quantitative Research

This information is currently unavailable.

Fund Track Record

15/07/19 to 15/07/20 15/07/20 to 15/07/21 15/07/21 to 15/07/22 15/07/22 to 15/07/23 15/07/23 to 15/07/24
Annual return n/a 17.76% -2.58% 3.11% 11.71%

Please remember past performance is not a guide to future returns. Where no data is shown, figures are not available. This information is provided to help you choose your own investments, remember they can fall as well as rise in value so you may not get back the original amount invested.

Information about the fund

Fund manager biography

manager photo
Manager Name: Jason Forster
Manager start date: 15 April 2019
Manager located in: London

Jason Forster is a Senior Fund Manager in Index Funds and heads up the team responsible for the fund management of the UK and Asian regions. Jason was formerly responsible for the development of the in-house index fund management system before becoming a Fund Manager in 2002. Prior to joining LGIM in 1999, Jason worked for Hermes Fund Management and was involved in portfolio performance measurement. Prior to Hermes, Jason gained valuable experience working for FTSE International for over two years as an indices analyst. He began his career in 1992, working for the Financial Times as a news text editor and then as a prices editor. Jason completed Business Studies at Southampton Solent University and is a member of the LPX Index Committee and the FTSE EMEA Regional Committee.

Data policy - All information should be used for indicative purposes only. You should independently check data before making any investment decision. HL cannot guarantee that the data is accurate or complete, and accepts no responsibility for how it may be used. Benchmark data provided subject to this disclaimer.
You can buy or sell holdings in this fund through a Stocks and Shares ISA, Lifetime ISA, SIPP or Fund and Share Account