Legal & General Investment Management (LGIM) has cross-listed five of its core low-cost equity ETFs on Deutsche Börse, Borsa Italiana, and Euronext Amsterdam.
LGIM first launched its low-cost core equity ETFs on London Stock Exchange in November 2018.
The ETFs are linked to indices from Solactive and include Global, US, Japan, Europe ex-UK, and Asia Pacific ex-Japan equity exposures. The indices track the large and mid-cap segments of their respective target markets, representing approximately 85% of the free-float market capitalization.
The funds may help shield investors from the unpredictable behaviour of crowded trading that is sometimes experienced by core ETFs tracking mainstream indices.
LGIM notes that the vast majority of index-tracking assets have turnover that is concentrated on just a handful of major trading days each year – when the major indices (such as the S&P 500 or MSCI EAFE) rebalance. By tracking non-mainstream indices, the ETFs avoid rebalancing at the same time as the vast majority of core equity ETFs, where periods of potentially high short-term price volatility may occur.
LGIM argues that the risk from this volatility is increasing as more assets flow into index funds, pointing to the need for an alternative approach.
Despite tracking less well-known indices, the ETFs share similar composition characteristics and risk attributes with their more familiar peers, with considerable overlap in holdings and, in some cases, near-identical weightings. LGIM reports that in back-tests the indices exhibit a 99.9% historical correlation with comparable indices from a major index provider.
In addition to rebalancing to a different timetable, the indices also incorporate consideration of environmental, social and governance (ESG) factors, screening out manufacturers of controversial weapons, pure coal companies, consistent violators of the UN Global Compact, and companies on LGIM’s Future World Protection List.
The funds were initially listed on London Stock Exchange in November 2018 where they trade in US dollars or pound sterling.
The funds, along with their Xetra, Borsa Italiana, and Euronext Amsterdam ticker codes, are outlined below:
L&G Global Equity UCITS ETF (ETLQ GY); (LGGL IM); (LGGL NA)
L&G US Equity UCITS ETF (ETLS GY); (LGUS IM); (LGUS NA)
L&G Japan Equity UCITS ETF (ETLR GY); (LGJP IM); (LGJP NA)
L&G Europe ex-UK Equity UCITS ETF (ETLNG GY); (LGEU IM); (LGEU NA)
L&G Asia Pacific ex-Japan Equity UCITS ETF (ETLK GY); (LGAP IM); (LGAP NA)
The new share classes trade in euros and accumulate income within their portfolios. The US-focused ETF has a total expense ratio (TER) of 0.05%, while the other funds cost 0.10%.