New Model Adviser Retreat 2012This is not a consumer advertisement. It is intended for professional financial advisers and should not berelied upon by private investors or any other persons.
Legal & General: Massive in Passive 2• A leading provider of retail index mutual funds in the UK.• Over 20 years’ experience in managing index mutual funds for UK clients.• Manager of £238 billion in index funds assets*.• The manager of choice for investment advisers to over 2,800 UK pension schemes*.• More S&P Capital IQ Platinum fund ratings than any other UK index fund provider.* Source: LGIM as at 31 March 2012
Being a Successful Passive Provider – What Do You Need? 3• SCALE.• Long term commitment.• Experience and skill - Sophisticated implementation - Reducing costs• Is it worth adding risk to enhance returns?
Passive Vs. Active 4• Active or passive? An age old debate.• Asset allocation or fund manager alpha?• The ‘News at Ten effect’.• The right blend - The best of both worlds.• Tactical versus strategic
Active Funds: Some Consistently Fail to Deliver 5 2009 2010 2011Number of Funds 271 278 283Total number of funds in the IMA UK All Companies SectorThe Underperformers 147 100 185Total number of funds underperforming the L&G UK Index Trust R AccConsistent UnderperformersNumber of funds that have underperformed the L&G UK Index Trust R Acc in 33each of the last three yearsWhat does this amount to?Total AUM this represented as at end 2011 £9.25bn Data source: Lipper IM
A Balance of Growth and Income 6• The myth: Equity index funds are purely a growth strategy.• No management style bias.• Low fees; more income.• Yields on index funds; a pleasant surprise.• Income in growth markets. Average Yield Fund Fund Yield IMA Sector L&G UK Index R Acc 3.10% 1.59% Legal & General European Index R Acc 2.79% 1.60% Legal & General US Index R Acc 1.00% 0.49% Legal & General Japan Index R Acc 1.35% 0.73% L&G Pacific Index R Acc 2.40% 1.36% L&G Global Emerging Markets Index R Acc 1.47% 0.66% Data source: Lipper IM
Benefiting Your Business and Your Clients 7• Commercial response to RDR.• Removal of trail commission levels the remuneration playing field.• Improved portfolio efficiency / TAA• Customers more aware of ‘cheap beta’.• Reduced costs – Less due diligence, easier reporting.
Benefiting Your Business and Your Clients 8 • Historic Value Chain Customer PaysActive 0.75% 0.25% 0.50% 1.50% ‘R’Passiv Varied 0.65% + 0.40% 0.25 Trail + Fee? e ‘R’ Approach (++?) • N Customer Pays eActive w 0.75% 0.40% 0.75% - 1%? 2%+ ? ‘I’ VPassiv a e ‘I’ 0.20% 0.40% ? 1.50% ? l u e Fund Manager Platform Adviser Fee C h a i
Benefiting Your Business and Your Clients 9• Risk rated portfolios. Meeting the needs of the mass market?• Expect new passive-based solutions based on simplicity and low cost Source: Distribution Technology
Accessing Global Macro Themes 10• Capturing the beta of long-term global investment trends: - Emerging markets; The rise of the consumer. - A resource constrained world - An ageing developed world. - Technology; limitless innovation
Alternatively Weighted Indices 11• Market capitalisation; still the benchmark.• Innovative indices: - Sector weighted - Equal weighted - Fundamental weighted http://www.landginvestments.com/Global-Environmental-Enterprises/Fund-Selector/Fund-Overview.aspx
Legal & General Index I Class Fund Charges 13Fund Name Fund Charges (%)Fund / Unit Class Name AMC OCFLegal & General UK Index Trust I Class (Acc / Inc) 0.20 0.22Legal & General All Stocks Gilt Index Trust (Acc / Inc) 0.20 0.23Legal & General All Stocks Index Linked Gilt Index Trust (Acc / Inc) 0.20 0.23 0.23Legal & General Sterling Corporate Bond Index Fund (Acc / Inc) 0.20 Estimated at launchLegal & General UK 100 Index I Trust I Class (Acc / Inc) 0.20 0.25Legal & General US Index Trust I Class (Acc / Inc) 0.20 0.23Legal & General Japan Index Trust I Class (Acc / Inc) 0.20 0.24Legal & General European Index Trust I Class (Acc / Inc) 0.20 0.25Legal & General Pacific Index Trust I Class (Acc / Inc) 0.20 0.27Legal & General Global 100 Index Trust I Class (Acc / Inc) 0.30 0.31Legal & General Global Health & Pharmaceuticals Index Trust I Class (Acc / Inc) 0.30 0.31Legal & General Global Technology Index Trust I Class (Acc / Inc) 0.30 0.31Legal & General International Index Trust I Class (Acc / Inc) 0.30 0.38Legal & General Global Emerging Markets Index Fund I Class (Acc / Inc) 0.30 0.57
Disclaimer 14Important InformationThis presentation, and any information it contains, has been produced for use by professional investors and financial advisers only andshould not be distributed without the permission of Legal & General (Unit Trust Managers) Limited.The stated investments are authorised unit trusts managed by Legal & General (Unit Trust Managers) Limited, authorised and regulatedby the Financial Services Authority.The risks associated with each fund are set out in their respective Prospectus and Key Investor Information document, which customersshould read before making any investment decisions. Additional information in relation to the Risk Management process is available onrequest. A copy of these documents can be obtained from Legal & General (Unit Trust Managers) Limited. Lines are open Monday toFriday, 9am to 5pm. Call charges will vary. We may record and monitor calls.Past performance is not a guide to the future. The value of investments and any income from them can fall as well as rise and is notguaranteed. Investors may get back less than they invest.Issued by Legal & General (Unit Trust Managers) Limited. This document should not be taken as an invitation to deal in Legal & Generalinvestments or any of the stated investments. .H134214.