Legal & General Investment Management has launched a Short-Term Alternative Finance fund, which will sit on a new ‘reserved alternative investment fund’ (RAIF) platform.
The Luxembourg-based fund will invest in a portfolio of sub-one-year private credit assets, with the aim of offering investors a strategic alternative to cash and other short-dated credit alternatives. The strategy will target attractive yields and low volatility, from securities with an average investment-grade rating.
All transactions for the fund are underwritten by LGIM’s alternative debt investment team, led by Matthew Taylor, with Sam Jones acting as joint fund manager. Types of short-dated alternative finance the fund could invest in include capital call facilities, supply chain finance, trade receivables and asset-backed financing.
“Short-dated alternative finance can provide an attractive solution for enhanced returns in comparison to liquidity funds or holding cash,” said Taylor. “It achieves this with low duration and volatility helping investors to maintain sufficient liquidity with potentially reduced risk when compared to other alternatives.”
‘Key step’
LGIM went on to describe the newly launched RAIF platform as “a key step” in its European and global growth ambitions, providing international investors access to the company’s private credit capabilities. It also said this would be “a significant enabler” of further funds with an international focus that LGIM would look to launch on the platform over the course of the year.
“We are proud to have launched a second iteration of this fund and to open it up to investors,” said Nick Bamber, head of private credit at LGIM. “Our short-term strategy is a fast-growing area of our business, having deployed over £2bn [€2.3bn] since 2021. Having grown LGIM’s footprint and product offering in continental Europe for several years, we believe this asset class offers attractive yields, low risk and a strong pipeline ahead. This makes short-term alternative finance a potentially attractive, strategic cash alternative for investors.”
