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L&G tracks the pensions market

Legal & General is going for the older end of the market with the introduction of the global equity index fund.

The product is a pension fund aimed at people who are looking for a core-satellite strategy for their pension fund. This is a strategy that has the bulk of its investment in tracker funds, with the rest in an actively managed fund, so that the risk is spread about.

A total of 70 per cent of the fund will invest in the Legal & General UK equity index fund, which tracks the FTSE all share index. The remaining 30 per cent is invested in a broad spread of Legal & General overseas equity pension funds, ranging from the US to Europe and Japan.

There is also a lifestyle option. This comes into action five years before the client retires and transfers a set proportion of the pension fund into fixed interest and cash funds every year. This reduces the risk of the fund being hit by a last minute stockmarket crash.

Tracker funds are suitable for an investor who does not want an actively managed fund. However although they can be good long-term investments, they can follow an index down as well as up, giving them mixed performance during a period of stockmarket turbulence.

According to Standard & Poor’s the Legal & General UK equity index fund is ranked 105 out of 228 funds, based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to March 26, 2001.

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