Legal & General's Linked Life Distribution fund, celebrating its 10th year on the market, is looking to an overweight position in global equities focused on Europe and Asia to provide continued outperformance compared to its peer group.
Lead fund manager David North says returns from all asset classes may remain in the single digits this year, but the two regions mentioned should outperform because the price of equities in those regions are more reasonable.
Some £100m out of the fund’s £646m equities exposure is now outside the UK. Part of the reason for this is to avoid doubling up exposure to, for example, UK banks, which provide both dividend income through share holdings and fixed income through bond holdings.
Yields from UK banks and oil stocks are key to meeting the £1.5bn fund’s focus on generating income, North says, but taking the risk and shifting more money into European and other stocks has paid off.
North shifted about £200m in total into equities near the bottom of the stock market last year, he says, on the basis prices at the time indicated there would never be any more UK economic growth.
Long term the fund is aiming for about 40% of its portfolio in equities, against its current level of about 44%, North adds.
Property accounts for just shy of 13% of the fund’s portfolio by value, which is in line with the long-term goal, but North says the property sector is not so attractive compared to the yields available between 18 to 24 months ago.
Although the fund has performed well in the past decade, there are some specific risk factors that L&G, like any provider, faces this year, North says.
One is the rate of change in US monetary policy, with further hints in recent weeks that rates will start edging upwards by the summer.
Another risk is the possibility of a Madrid-style terrorist event hitting the US in the run-up to presidential elections set for November. North says what happened in Madrid might be considered a “blue-print” for further action, which would hit markets hard because of the uncertainty such events bring with them.
Meanwhile, with the tenth anniversary of the fund in mind, L&G is offering IFAs the chance to win one of four weekend prize packages to attend the Euro 2004 finals in Portugal this summer.
A football-related quiz focused on the number “10” will be available to registered IFAs through a microsite at www.legalandgeneral.com/EuroFINAL, which goes live on 10th May, or by following a link available at www.legalandgeneral.com/ifacentre.
A tie-breaker will decide the winners, but the lucky four winners can look forward to free flights and transfers, hotel accommodation, hospitality and a ticket each to see the final of the championships.IFAonline
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