LGIM assets tumble over 10% as LDI business suffers

investmentweek.co.uk:

Overall AUM at LGIM fell by £132bn to £1.158trn in the first half of the year, a drop of 10% compared to the £1.29trn reported for the same period in 2022.

Overall AUM fell by £132bn to £1.158trn during the period, a drop of 10% compared to the £1.29trn reported in the same period in 2022. According to the company, this was mainly due to the negative impact of higher interest rates.

However, investors also pulled £19.7bn out of LGIM's UK DB Solutions business, its liability-driven investment arm, during the period.

Market confidence rebounds in Q2 as manager performance remains mixed

LGIM delivered operating profit of £142m at the half year point, down £59m from £200m for the first half of 2022, a drop of 29%.

Management fee revenue decreased by 11% to £431m, compared to £485m a year ago, while transactional revenue stayed the same at £9m, including execution fees from hedging activity and performance fees.  

The decrease in management fees was primarily linked to rising interest rates, particularly in the UK, which caused average AUM to fall by 13% over the past year, LGIM said.

In UK Wholesale, LGIM achieved its highest ever gross sales, pointing to its Strategic Bond fund in particular which attracted strong inflows in the period totalling £200m, and higher margin multi-asset funds, which now have over £10.5bn in AUM from UK retail investors.  

Spot the Dog: Number of consistently underperforming equity funds soars to 56

A key driver of LGIM's global Wholesale growth strategy was its ETF products. It said that since acquiring Canvas from ETF Securities in 2018, revenue has more than tripled.  

However, 40% of LGIM's revenue comes from actively managed funds. Among these, the company pointed to UK-managed active