Legal & General International Index Trust: December 2025 fund update

• Legal & General is one of the UK’s leading providers of passive funds

• We view this fund as an excellent option for accessing a broad range of global markets

• A low-cost and simple way to track the performance of the FTSE World ex UK Index

• This fund currently features on our Wealth Shortlist of funds chosen by our analysts for their long-term performance potential

How it fits in a portfolio

The Legal & General International Index Trust offers investors broad exposure to global markets and sectors while excluding the UK. This includes a range of companies in both developed and advanced emerging markets, although these can still be higher risk.

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 an investment portfolio aiming to deliver long-term growth. It could be used to provide international diversification to a portfolio already focused on the UK.

Manager

Legal & General has managed index tracker funds for over 30 years and is one of the largest providers of index funds in the UK. That means it’s got the resources and expertise to track indices as closely as possible, and the scale to keep charges to a minimum.

Each index fund at Legal & General has a primary and secondary manager, though in practice the team as a whole helps to manage each fund. Alongside the wider team, Hailey Choi is the primary manager responsible for this fund. Prior to joining Legal & General in 2022, Choi worked at Samsung Asset Management where she was an ETF (exchange traded fund) portfolio manager. The secondary manager for this fund is Jason Forster. He previously worked on the firm’s index fund management systems before becoming a fund manager in 2002.

Process

This fund tracks the performance of the FTSE World ex UK Index. As expected from a global fund, it’s heavily invested in US companies which make up 70% of the index. The rest is diversified across a range of global markets, like Japan, Canada and Taiwan, while excluding the UK. The technology sector accounts for the largest portion of the fund at 35%. Other key sectors include financials, consumer discretionary and industrials.

There are currently 2,226 holdings in the fund versus 2,401 in the index. The team would preferably invest in every company in the benchmark and in the same proportion. However, this isn’t always possible as it can be more difficult to buy and sell the smallest companies quickly or at low cost, and this could ultimately impact performance. This is known as partial replication, which could help the fund track the index closely without incurring the cost of holding every company.

In any index tracker fund, factors like withholding taxes, dealing commissions and spreads, and the cost of running the fund all drag on performance. The team try to keep the fund’s turnover, the frequency at which shares are bought and sold, as low as possible to reduce some of these costs.

Legal & General cross trades shares internally across all its own funds when there’s an index rebalance. Trading efficiently like this helps to minimise costs and reduce the tracking difference between the fund and the index.

Culture

Legal & General has developed its passive fund range over the last three decades. The company manages around £510bn in tracker funds, allowing it to offer a wide range of index-tracking options.

Legal & General has built a team of experienced passive fund specialists and is innovative too. If an index doesn’t exist for a sector the team would like to track, they’ll often work with index providers to create one so they can track it.

The team running this fund works closely with various risk departments across the business. We believe this provides support and adds challenge where appropriate.

Employees are also encouraged to participate in Legal & General’s sharesave scheme which should encourage them to be more engaged with the growth of the company. In addition, a portion of fund managers’ bonuses are invested into the funds they manage. By doing this, their interests are further aligned with the investors in the fund.

ESG Integration

Legal & General Investment Management (LGIM) is predominantly a passive investor, but we are impressed with the extent to which they’ve woven Environmental, Social and Governance (ESG) into its culture. Being a mostly passive fund house hasn’t stopped them being innovative when it comes to ESG. In May 2019, the firm launched its ‘Future World’ range of funds, which invest more in companies that score well on a range of ESG criteria, though the International Index fund isn’t part of that range.

In 2019, LGIM established its Global Research and Engagement Platform, which brings together representatives from the investment and stewardship teams, in order to unify their engagement efforts. Engagement is conducted in line with the firm’s comprehensive engagement policy. A detailed description of the firm’s engagement and voting activity (including case studies) is available in its annual Active Ownership report. Quarterly Engagement reports are also available.

LGIM’s Stewardship team is responsible for exercising voting rights globally, both for LGIM’s active and index funds. Voting decisions are publicly available through a tool which allows a user to search for any company to find out how LGIM voted, and a detailed rationale is provided for votes against management and abstentions.

The Legal & General International Index Trust is a passive fund designed to track an index that doesn’t specifically integrate ESG analysis or exclude companies in certain industries, like tobacco or energy.

Cost

The fund has an annual ongoing annual fund charge of 0.13%, but a discount of 0.05% is available for HL investors, which reduces the charge to 0.08%. We believe this is good value when compared with other global passive funds. Our platform charge of up to 0.45% per annum also applies, except in the Junior ISA where no platform charge applies.

Performance

Global markets have performed well over the last 10 years. Over this period, the fund’s returned 258.30%* and tracked the FTSE World ex UK Index closely. This performance is partially down to the inclusion of technology companies in the index whose share prices have grown strongly in recent years. But remember, past performance isn’t a guide to the future.

Over the past 12 months, the fund gained 13.41% versus 13.56% for the index. The US stock market contributed the most to the fund’s performance as it makes up a large part of the global market. While returns were positive, the US lagged most other major markets due to concerns that Trump’s tariffs could cause inflation to rise again and slow growth in the US.

South Korea and Taiwan were some of the best performing markets, largely driven by their technology sectors. Both countries are home to world-leading semiconductor companies, Samsung Electronics and SK Hynix in Korea and Taiwan Semiconductor Manufacturing Company (TSMC), which have benefited from the strong demand for AI chips. This has boosted their profits and share prices.

Despite global stock markets performing well, it’s been a volatile year due to tariff uncertainty, trade tensions and ongoing conflicts in Ukraine and the Middle East.

Given Legal & General’s size, experience and expertise running index tracker funds, we expect the fund to continue to track the index closely in the future, though there are no guarantees.