What is the Lifetime Advantage Fund (LAF)?

Private markets are an investment in an asset class (includes, but is not restricted to, property, private equity, and infrastructure) that are not listed or traded on an a traditional exchange. These could include unique investment opportunities in building developments in towns or cities.

Private equity is stocks and shares in a company that haven’t been offered to the public. Every day companies that we use and see around are actually private. The supermarket chain Aldi is an example of a private company, as are some other supermarkets, this doesn’t mean our fund is invested in these companies. Our Private Markets Access fund invests in companies, such as start-ups that are being created out of universities such as Oxford, and even much larger, global companies. Investing in companies and new initiatives such as AI enabled healthcare or agricultural technology may generate better returns, however, there is a greater risk that those start-up companies will fail than companies who have a more established trading history. When we reference infrastructure, this is physical assets, an example of this that our fund invests in is affordable homes, these are high-quality, energy-efficient homes and projects to develop fast growing cities around the country, such as Oxford. Investments in the private market can also focus on sustainability. These investments can help provide clean energy through windfarms and solar power.

Investing in private markets provides the opportunity to benefit from the long-term growth potential of these investments.

Private market investments provide your pension savings with access to a much broader range of investment opportunities and have the potential to improve long-term growth, more than traditional public markets. But it can be more volatile, investment success isn't guaranteed, and values can decrease as well as increase, details of the fund specific risks can be found in the fund factsheet.

The value of the investment will depend on the value of the underlying assets owned and investors may receive income from the underlying assets. Private markets are part of the overall asset mix the Lifetime Advantage Fund is invested in, the percentage invested in private markets adjusts with your investments to fit your chosen retirement age, more details on the percentage invested in private markets is shown the fund factsheet.

The factsheets within Generation 3 Fund Range are also applicable to Mastertrust Pension Plans.

L&G PMC 2015-2020 Lifetime Advantage Fund 3Opens in new tab (PDF 91KB)

L&G PMC 2020-2025 Lifetime Advantage Fund 3Opens in new tab (PDF 91KB)

L&G PMC 2025-2030 Lifetime Advantage Fund 3Opens in new tab (PDF 98KB)

L&G PMC 2030-2035 Lifetime Advantage Fund 3Opens in new tab (PDF 101KB)

L&G PMC 2035-2040 Lifetime Advantage Fund 3Opens in new tab (PDF 101KB)

L&G PMC 2040-2045 Lifetime Advantage Fund 3Opens in new tab (PDF 102KB)

L&G PMC 2045-2050 Lifetime Advantage Fund 3Opens in new tab (PDF 101KB)

L&G PMC 2050-2055 Lifetime Advantage Fund 3Opens in new tab (PDF 91KB)

L&G PMC 2055-2060 Lifetime Advantage Fund 3Opens in new tab (PDF 98KB)

L&G PMC 2060-2065 Lifetime Advantage Fund 3Opens in new tab (PDF 101KB)

L&G PMC 2065-2070 Lifetime Advantage Fund 3Opens in new tab (PDF 101KB)

L&G PMC 2070-2075 Lifetime Advantage Fund 3Opens in new tab (PDF 102KB)

L&G PMC 2075-2080 Lifetime Advantage Fund 3Opens in new tab (PDF 101KB)

L&G PMC 2080-2085 Lifetime Advantage Fund 3Opens in new tab (PDF 101KB)

L&G PMC 2015-2020 Lifetime Advantage Fund G25Opens in new tab (PDF 101KB)

L&G PMC 2020-2025 Lifetime Advantage Fund G25Opens in new tab (PDF 91KB)

L&G PMC 2025-2030 Lifetime Advantage Fund G25Opens in new tab (PDF 91KB)

L&G PMC 2030-2035 Lifetime Advantage Fund G25Opens in new tab (PDF 98KB)

L&G PMC 2035-2040 Lifetime Advantage Fund G25Opens in new tab (PDF 101KB)

L&G PMC 2040-2045 Lifetime Advantage Fund G25Opens in new tab (PDF 101KB)

L&G PMC 2045-2050 Lifetime Advantage Fund G25Opens in new tab (PDF 102KB)

L&G PMC 2050-2055 Lifetime Advantage Fund G25Opens in new tab (PDF 101KB)

L&G PMC 2055-2060 Lifetime Advantage Fund G25Opens in new tab (PDF 91KB)

L&G PMC 2060-2065 Lifetime Advantage Fund G25Opens in new tab (PDF 98KB)

L&G PMC 2065-2070 Lifetime Advantage Fund G25Opens in new tab (PDF 98KB)

L&G PMC 2070-2075 Lifetime Advantage Fund G25Opens in new tab (PDF 101KB)

L&G PMC 2075-2080 Lifetime Advantage Fund G25Opens in new tab (PDF 101KB)

L&G PMC 2080-2085 Lifetime Advantage Fund G25Opens in new tab (PDF 102KB)

Each fund carries some risks specific to the type(s) of assets it invests in. The investment risks that are specific to each L&G PMC Lifetime Advantage Fund are as shown here:

1. Equities

The fund invests in equities (shares of companies), so there is a higher risk of the fund’s value being volatile (i.e. going up and down) than with a fund which invests in most other asset types, particularly in the short term.

2. Fixed Interest Securities

Investment returns on fixed interest securities, such as corporate and government bonds, are particularly sensitive to trends in interest rate movements and inflation. Their values are likely to fall when interest rates rise. Such falls may be more pronounced in a low, or negative interest rate environment and longer dated fixed interest securities will fall by more than short dated fixed interest securities.

3. Risk of Issuer Becoming Less Secure

The fund invests in securities. The financial strength of a company or government issuing the security determines their ability to make some or all of the payments due. If this financial strength weakens, the chances of them not making payments increases and this will reduce the fund’s value.

4. Sub-Investment Grade

The fund invests in higher yielding bonds (known as ‘sub-investment grade’ bonds). Compared to lower yielding bonds (known as ‘investment grade’ bonds) there is a greater risk that the fund will not receive back, either on time or at all, some or all of the amount invested or interest that is due to be paid.

6a. Derivatives: In Relation to Funds using Derivatives for "EPM" Purposes

The Fund may undertake derivative transactions as part of efficient portfolio management (“EPM”) or reduction in investment risk in line with the Historic FCA Permitted Links rules.

8. Small Companies

This fund invests in equities issued by smaller companies. These investments tend to be riskier than investments in larger companies because they may be harder to buy and sell and their price may be more volatile-particularly in the short term.

10. Emerging Markets

The fund invests in emerging markets where there may be limited information available publicly to investors.  In general, emerging market issuers are not subject to accounting, auditing and financial standards and requirements similar to those required of developed market issuers. Also, local laws may prevent the repatriation of capital or profit from those countries into the UK.  In addition, the stock markets and currencies of emerging markets can be volatile, due to the fact that the political and economic systems in these countries are still developing. In such cases delays in settlement may cause the fund to have exposure to a third party broker or counterparty.  This may result in a greater risk that the value of the fund might go down. The investments in these markets might also be bought and sold infrequently therefore resulting in large changes in their prices

12. Property

The fund invests in commercial property. Property can be difficult to buy or sell. This could mean that:

• Cash remains uninvested and/or 
• Property may have to be sold for less than expected.

If a significant amount of withdrawals from the fund is requested by investors, the fund manager may be forced to sell properties quickly. This could mean that properties are sold for less than expected which would reduce the value of your investment in the Fund.

In exceptional circumstances; 

• it may not be possible to sell properties quickly and/or 
• it may be difficult for independent valuers to assess the market value of the properties held by the Funds. 

In such circumstances the Company can defer the payment of amounts due on the surrender of Units or suspend dealing in the fund where this is in the interest of all investors in the fund.  If dealing is suspended at a time when you want to Surrender Units in the fund, it could become necessary for the Company to delay acting on your instructions. This would lead to a delay in dealing with your request to surrender Units in the fund.

If the size of the fund falls significantly, the fund may have to hold fewer properties. This may lead to an increase in its risk as the fund performance will be based on the performance of a small number of properties and therefore the poor performance of one of them will have a larger impact on the fund than if the fund was holding a large number of properties.

Rental growth is not guaranteed and unpaid rent could affect the performance of your investment in the fund.

The fund may undertake development of properties where the full benefit of any increases in the value of the property or the income earned from it are not received until completion. While any development is taking place, the fund is at risk from delays in receiving the benefit of any improvements, and additional costs. Developments may not achieve the predicted increase in the value of the property or rent.

The value of property is generally a matter of valuer’s professional opinion rather than fact.

13. Money Market

The fund invests in money market products, with banks and other financial institutions. There is a risk of investing in money market products, if the financial institutions which hold the deposits suffer financial difficulties or become insolvent, they may not pay back some or all of the amount invested with them. This could mean that the Fund might not get back the full amount deposited and its value will fall.  Some money market investments may be illiquid. The value of money market securities may fall due to changes in interest rates -including periods of negative interest rates, inflation, creditworthiness, wider credit events or extensions to the anticipated term of investments. If this happens the value of your fund may fall.

15. Exclusions

The investment policy applied to this fund may mean that it cannot invest in some companies or in certain sectors. These restrictions mean that should the sectors in which the fund cannot invest be the best performing ones the value of the Fund will not increase as strongly as the value of funds which can invest in these sectors.

22. Stock Lending

The fund manager may lend stock to other parties and it is usual for the borrower to provide collateral. If the borrower fails to return the borrowed stock, the collateral may not be enough to cover the value of the stock, resulting in a reduction in the fund value.

23. Inflation and Index Linked Instruments

The fund invests in inflation-linked bonds, which are particularly sensitive to changes in inflation rates. Their values are likely to fall when inflation rates fall.

24. Pre-Retirement Funds

The fund is designed to be used as part of a pre-retirement strategy by investors who are expected to purchase an annuity at retirement.

25. Exchange Traded Funds

Exchange Traded Funds generally try to match the performance of a share index, such as the FTSE 100 index, or to track the price of commodities such as oil or gold. Exchange Traded Funds can use a number of different techniques to achieve their goals (including the use of derivatives) and as a consequence can be more complex than traditional funds. The value of this investment may go up and down more often and by larger amounts, particularly in the short-term

30. Retirement Income Drawdown

Investors may receive less income through drawdown than if they had bought an annuity. They will not benefit from the security of a guaranteed income for life that an annuity offers. The policyholder should ensure that the pension scheme member speaks with his/her adviser about the level of income needed, their potential sources of income and overall financial circumstances before deciding how to take retirement income from the Fund.

36. Exclusion of Companies Who Do Not Meet LGIM’s Standards in Accordance with LGIM’s Climate Impact Pledge

Investors may receive less income through drawdown than if they had bought an annuity. They will not benefit from the security of a guaranteed income for life that an annuity offers. The policyholder should ensure that the pension scheme member speaks with his/her adviser about the level of income needed, their potential sources of income and overall financial circumstances before deciding how to take retirement income from the Fund.

37. Turnover

The fund uses an investment strategy which is not benchmarked against a traditional market capitalisation index.  Alternative indices may have features such as greater turnover and higher weighting to less liquid stocks than a traditional index. Consequently the dealing costs associated with the turnover of securities within the Fund may be high and impact the performance of the Fund against the index.

41. Infrastructure

The fund will invest in the securities of companies principally engaged in the infrastructure industry and/or loans and debt securities which are related to infrastructure investments

42. Real Estate

The fund will invest in the securities of companies principally engaged in the real estate industry and/or loans and debt securities which are related to real estate investments.

43. Private Companies

The fund will invest in assets which have exposure to private/unlisted equities or hold instruments that provide exposure to private debt. Compared to larger, publicly owned firms, small and medium sized privately owned companies generally have limited financial resources, limited access to capital and higher funding costs. These companies frequently have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which render them more vulnerable to competitors’ actions and market conditions, as well as general economic downturns.

62. Delayed Repayment

This fund is able to delay paying out, which may mean that you have to wait to get your money. A delay may happen when market conditions mean it is difficult for the fund manager to cash in investments to pay out to investors. 

For example, a fund with investments in commercial properties may find they may take time to sell. Whilst waiting to complete on the sale of properties, the fund manager may suspend making payments to investors who want to cash in. The fund can only delay paying out if it is in the interests of all investors.