Assets at Legal & General Investment Management surged to £841.5 billion by June 30, up 18% from the £714.6 billion year-ago level and up 13% from their £746.1 million level at the end of 2015, according to its interim results published on August 9.
Group chief executive Nigel Wilson said the asset growth meant LGIM is now the 10th biggest asset manager in the world.
The growth was driven by £86.1 billion in market movements and £9.9 billion in net inflows, two thirds of which came at LGIM’s solutions business. L&G said a “significant appreciation in asset values” towards the end of June helped propel assets, indicating its funds arm was a substantial beneficiary from the market movements caused by the UK’s decision on June 23 to leave the European Union.
LGIM’s international business recorded net inflows of £6.7 billion, compared with £5.4 billion in the first half of 2015, with positive flows in the US, Europe, the Gulf and Asia the key growth drivers. Total international assets under management now stand at £151.9 billion, a 31% increase on a year ago.
Wilson said in a pre-recorded presentation: “This reflects the fact that though the asset markets have been difficult, the areas that we have been concentrating on have been doing pretty well, so we are very happy with the performance in the first six months of the year.”
LGIM said its defined contribution client base now stood at over 2 million customers on its workplace platform, with Wilson stating there was no reason why the firm couldn’t aim for 20 million members.
In what L&G described as an “extremely difficult period”, the asset manager’s retail business also saw external net inflows of £0.7 billion over the first half, up on £0.3 billion a year earlier.
Although LGIM’s total external net inflows of £9.6 billion were down compared with £13.8 billion a year ago, the firm said it was “well-positioned to handle the uncertain economic and political environment that lies ahead, and continuing fee pressure in asset management markets”.
The firm’s real assets business, where net inflows dropped to £0.1 billion from £0.4 billion a year earlier, had been “impacted by the uncertainty” caused by the EU membership referendum, which hit property dealmaking.
LGIM was, however, one of the few firms able to keep its UK property fund open following the investor panic caused by the vote.
LGIM’s revenues edged up to £353 million from £347 million a year earlier, with management fee revenues also increasing 4% to £337 million, although operating profit slipped to £174 million from £179 million.
LGIM’s liability-driven investment and multi-asset business both grew during the first half of 2016. The firm has said it wants to gain market share in pooled LDI solutions, which it has identified as the fastest-growing segment of the market. Net inflows for its solutions products, which include LDI and multi-asset products, were £6.7 billion compared with £12.3 billion a year ago.
In terms of L&G’s broader outlook, the insurer said: “Although no business model can be immunised against slowing global economic activity, the opportunities available to the group should remain largely unchanged and we will strive to execute our strategy successfully to deliver profitable growth.”