11 Jul 2023

LGIM America Launches Innovative Commodities Mutual Fund

Chicago, IL (July 11, 2023) – LGIM America (LGIMA), a registered investment adviser specializing in designing and managing investment solutions in the US market across active fixed income, equity and portfolio solutions (including multi-asset and liability driven investment), announced the launch of a new innovative commodities mutual fund, which took place on June 20, 2023. The fund's launch continues to demonstrate the firm's dedication to its clients and its growing Defined Contribution (DC) capabilities.

The Legal & General Commodity Strategy Fund will be largely benchmarked against the Bloomberg Commodity Total Return Index. The fund primarily seeks to achieve its investment objective by investing the Fund's assets in a portfolio of commodity-linked investments (the "Commodity-Linked Portfolio"), which are backed by a portfolio of inflation-linked investments (the "Inflation-Linked Portfolio"). The commodity-linked investments in which the fund invests may include commodity swaps, commodity futures contracts, interest rate swaps and other commodity-related derivative instruments and in more limited cases exchange traded commodity pools or funds (collectively, “Commodity-Related Investments”).

With respect to the Commodity-Linked Portfolio, the fund’s assets are typically allocated to Commodity-Related Investments that provide exposure to two indexes. The first index aims to mitigate the effects of contango on index performance and is comprised of specific exchange-traded futures on physical commodities (the “Physical Commodities Portfolio”). The second index is composed of futures contracts on gold and it reflects the return of underlying commodity futures price movements (the “Gold Portfolio”). The fund will not directly hold any physical commodities and will generally seek to achieve its investment objective with respect to the Commodity-Linked Portfolio through the use of derivatives.

The fund invests the remainder of its assets in the Inflation-Linked Portfolio, which includes US Treasury inflation-protected securities (“TIPS”), inflation swaps, cash or cash equivalent investments and ETFs that invest in fixed income securities. With respect to the Inflation-Linked Portfolio, the fund seeks to provide a return that approximates, before fees and expenses, the performance of an index that measures the performance of TIPS.

"We wanted to capitalize on a client need in the market by providing investors with what we believe is an affordable commodities offering, and we are thrilled to add this new capability to our current mutual fund lineup," said Rob Capone, Head of Defined Contribution. "The experience of our LGIM America investment professionals, combined with the fund's exposure to gold, provides investors with a unique opportunity."

This Fund follows the 2022 launch of the firm's first mutual fund lineup, which included the firm's flagship fund, Legal & General Retirement Income 2040 Fund. The Retirement Income 2040 Fund is built on the firm's focus on retirement income and investment solutions that assist retirees in making informed spending decisions throughout their retirement journey.

Details of all funds are available on our website: http://www.lgima.com/funds.

Media contact
Carolyn Gasbarra
Edelman Smithfield
Carolyn.Gasbarra@edelmansmithfield.com
O: 630.220.0017

 

About LGIM America

LGIM America (LGIMA) was founded in 2006 with the purpose of helping people achieve their long-term financial goals. We offer a range of strategies to help our institutional clients (corporations, healthcare agencies, non-profit, educational institutions, public plans and Taft-Hartley multi-employer plans) manage their investment objectives, which can range from market-based alpha-oriented strategies, derivative overlays, equity solutions and those that are designed to be more liability-centric. Encouraging a diverse and inclusive environment coupled with a solutions-focused culture allows us to increase our breadth of knowledge and the likelihood of improved client outcomes and stronger financial performance. We have teams of experienced, innovative professionals committed to helping plan sponsors meet their pension promises, managing investment exposures efficiently to seek enhanced returns while mitigating risks, and working to generate returns while making a positive societal difference.

Key Risk Warnings

Indices are unmanaged and do not include the effect of fees. One cannot invest in an index. The Bloomberg Roll Select Commodity Index is a version of the Bloomberg Commodity Index that aims to mitigate the effects of contango on index performance. For each commodity, the index rolls into the futures contract showing the most backwardation or least contango, selecting from those contracts with nine months or fewer until expiration. The Bloomberg Gold Subindex reflects the return on fully collateralized positions in the underlying commodity futures. The Bloomberg US Treasury Inflation Notes TR Index Value Unhedged USD measures the performance of TIPS issued by the United Sates that have an investment grade rating and meet certain minimum outstanding thresholds. Contango refers to a market in which the price for a new futures contract is more than the price of the expiring contract. The Bloomberg Commodity Total Return Index is composed of futures contracts and reflects on a fully collateralized investment in the BCOM. This combines the returns of the BCOM with the returns on cash collateral invested in 13-week (3 Month) US Treasury Bills. Inflation Swaps are contracts in which one party pays a fixed rate in exchange for payments tied to an inflation index, such as the Consumer Price Index.

Carefully consider the funds' investment objective, risk, and charges and expenses before investing. This and other information can be found in the funds' prospectus, and if available, the summary prospectus, which may be obtained by visiting www.lgima.com/funds or by calling 1-8334- 4-LGIMA. Please read the prospectus carefully before investing. 

There are risks involved in investing, including loss of principal. Exposure to the commodities markets through commodity related investments may subject the Fund to greater volatility than investments in traditional securities. Commodity trading involves substantial risk of loss.The Fund's use of swaps and futures contract is subject to market risk, leverage risk, and liquidity risk. The Fund may experience losses that exceed losses experienced by funds that do not use futures contracts. There may be imperfect correlation, or even no correlation, between price movements of a futures contract and price movements of investments. The Fund may invest in derivatives, which are often more volatile than other investments and may magnify the Fund’s gains or losses. Inflation protected securities, including TIPS, are fixed income securities for which the principal and/or interest income paid is linked to inflation rates. Because the rate is applied to the adjusted principal, interest payments can vary in amount from one period to the next. At the maturity of a security, the Fund receives the adjusted principal or the original principal, whichever is greater. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Subsidiary is not registered under the Investment Company Act of 1940 Act, as amended (the “1940 Act”) and, unless otherwise noted in this Prospectus, is not subject to all of the investor protections of the 1940 Act. Thus, the Fund, as an investor in the Subsidiary, will not have all of the protections offered to investors in registered investment companies. The use of leverage may amplify the effects of market volatility.

The funds are distributed by SEI Investment Distribution Company (SIDCO). SIDCO is not affiliated with LGIM America.