Legal & General Investment Management (LGIM) has launched its Sustainable DC Property Fund, valued at £238m, following a growing demand from DC schemes to access real assets and to include greater ESG targets.
The fund will provide access to a diversified portfolio of assets across sectors and will incorporate responsible investing and ESG objectives as core targets into an existing property portfolio. This includes net zero operational carbon in its direct property portfolio by 2030.
It is currently measuring carbon emissions and has set reduction objectives as well as focussing on reducing operational energy consumption. It has developed carbon reduction roadmaps at individual asset level and commissioned an estimate of social value created by the fund to measure future social impact.
The Fund will target a 30 per cent allocation to the L&G Global Real Estate Equity Index Fund to provide liquidity and support daily dealing for DC clients.
LGIM Real Assets director of fund management Michael Barrie says: “Real estate is central in the transition to net zero as buildings play a major role in supporting a low-carbon economy and society. The demand for real assets is growing, three quarters of our recent major investment consultant conversations in DC Distribution have emphasised demand for them. We believe that protecting and enhancing real assets against the effects of climate change will create long-term value and performance. We are adopting this positioning now to capture this performance and to help enhance the long-term financial value of real estate.”
LGIM Real Assets director of strategy and ESG Rob Martin says: “The Fund will provide a market-leading offering for clients that demand an increased focus on ESG. Providing a portfolio that positions towards the highest net zero standards will benefit both occupier demand and investment performance, as well as reduce risk.”
LGIM head of DC investments Veronica Humble says: “Our research shows that DC members care deeply about ensuring that their pensions are invested in a responsible manner. The Sustainable DC Property Fund has ambitious carbon reduction targets and provides diversification through access to an alternative asset class that combines income and long-term capital growth.”