My pension fund manager – reassuringly boring.


I’ve worked out what I want from the person who runs my pension fund – I want them to be busy doing nothing. That’s more or less what Martin Dietz is doing running the Legal and General Multi-Asset Fund which is the default for it’s workplace pension.

Some people have commented on here that I could be more ambitious than to use a default fund for my money. But I say show them another way I can get exposure to 11,500 different stocks all over the world for a management fee of 0.13%.

I’d hooked up with Martin on Linked In as I’d seen him on my fund factsheet. I’d asked if he’d like to meet an investor in his fund and he’d kindly obliged. We met at a posh cafe in the City.

Here’s a rough transcript of my agenda and what Martin told me. I hope that it’s a reasonable record and that my epithet “reassuringly boring” will be  taken as a compliment. I am not looking for pyrotechnics, I want steady growth and limited drawdown.

I wanted to know from a personal and professional viewpoint his and LGIMs viewpoint on a number questions

  1. How does the targeting of MAF at DC savers affect the way you manage the fund?
  2. What are your private benchmarks for success with this fund?
  3. What are the main jobs you have to do as manager of the fund?
  4. How do you interact with the funds into which MAF invests?
  5. Do you see MAF as suitable for all stages of a DC saver’s journey
  6. Is MAF LGIM’s optimum fund for drawdown?
  7. Why don’t we hear about capacity issues with MAF (as we do with GARS and other rivals)?
  8. Do you share the group’s aims of social purpose?
  9. Do you see yourself adopting the ideas behind Nigel Wilson’s Beveridge 2.0 initiative?
  10. What interaction do you have with your IGC?

Here’s how the conversation went

How does the targeting of MAF at DC savers affect the way you manage the fund?

“To give you an example- before BREXIT I wrote to advisers explaining that though I expected Britain to “remain”, the fund was positioned to benefit from leaving. The economic harm of leaving would be softened for investors but they couldn’t expect the fund to pick up the full benefit of remain vote. I wrote this note to help people explain the fund’s behaviour. My thinking was that DC investors probably had enough to lose from BREXIT without their pension being at risk”

What are your private benchmarks for success with this fund?

“I want people to get an equity like return in the good times and have protection from equity performance in bad times. Currently the fund is providing a return that is around 3% less than the equity return – but equities have been the best performing sector of the market”.

What are the main jobs you have to do as manager of the fund?

“Firstly, I look at improving the diversification of the fund by investigating new funds, where we don’t have a fund I want, I help create the fund. For instance, we are looking at a way to access BBB credit funds

Secondly I look to increase the efficiency of the investment strategy by optimising the asset allocation

Thirdly I work on minimising the costs of the fund. This has been easy so far as we have been a small and growing fund but now the fund is valued at more than £2.6bn I expect transaction costs to increase though only to a few basis points.”

What are the restrictions you have in investing in funds?

“I won’t involve MAF in active fund management as it hasn’t got the budget (as a result of the charge cap). The fund is invested only in LGIM funds”

Do you see MAF as suitable for all stages of a DC saver’s journey?

“I’m aware of LGIM’s target date funds which move money from high to low volatile funds over a saver’s lifetime. We look to provide a consistent style of fund management which is very simple for investors to understand”.

Is MAF LGIM’s optimum fund for drawdown?

“There is another fund within the LGIM range (specifically the Retirement Income Multi Asset Fund (RIMA) which are used as defaults for drawdown, this aims to minimise the exceptional loss that can occur when a drawdown happens when the fund is severely depressed. However, we are comfortable with MAF being used for drawdown”.

Why don’t we hear about capacity issues with MAF (as we do with GARS and other rivals)?

“MAF is not invested in derivatives and invests according to market capacity. This gives it the highest level of liquidity- in other words it cannot run out of capacity to invest.”

Do you share your Group’s aims of social purpose?

“The work of our ESG and Stewardship team is to improve the performance of all stocks (MAF invests in 11,500 different stocks). Most of this work is in the UK but the Stewardship team is working more and more on overseas equities. We benefit from their work and decisions on where to allocate money are informed by their research on what markets show best governance”.

Do you see yourself adopting the ideas behind Nigel Wilson’s Beveridge 2.0 initiative?

“Not at the moment! The Diversified version of the MAF does have direct property holdings which may follow the approach the Group is using in the investment of Group Funds. But at the moment, our CEO’s vision for the future is not adopted in MAF.”

What interaction do you have with your IGC?

“I have to present the fund’s ongoing appropriateness once a year to the Chair but I am more accountable to the IGC’s investment consultant. Dean Wetton who asks a lot of searching questions and is vocal in challenging changes to the fund that might not be in member’s interests”

Refreshingly boring

It was good to have breakfast with Martin, he forms part of a team but he spoke of MAF with great ownership and some passion. He told me his own pension money is invested there.

The question of whether a single fund can be right for all investors all of the time is a difficult one. But with the total charges on the fund still at 0.13% and with the fund grown from nothing to £2.6bn in under four years, he is clearly managing a compelling proposition.

Martin is very clear on his objectives, very precise in his language and extremely modest in managing expectations. A big bet from the Diversified version of the fund ended in a 10bp gain from up weighting property.

The very good year we are having with the fund (relative to the ABI45/85 sector average) reflects the BREXIT positioning and the fund’s lack of property exposure.

Martin is the least demonstrative fund manager I have ever met. He seems to make a virtue out of being boring which I suspect is exactly what the L&G MAF needs.

Here’s that pre-Brexit briefing in full




Multi-Asset update: EU referendum. For use by direct LGIM clients and consultants only. For the avoidance of doubt, this communication does not seek (and is not to be regarded as seeking) in any way to influence the outcome of the EU referendum. It is being provided to help clients and intermediaries assess the potential impact of the referendum on their investments.


LGIM Diversified Fund (DF) and Multi-Asset Fund (MAF) update Dear Investors / Consultants,   We are now approaching the UK referendum on EU membership on 23 June 2016. We expect that there will be an elevated level of market volatility both on and after the referendum date as currency and asset markets price in the referendum result.

Any kind of market concerns about UK economic growth, regardless of the result of the UK referendum, could be expected to result in a sell-off in sterling and a decline in UK asset prices. This includes commercial property and equities, although profits of multi-national companies may benefit from a fall in sterling. Similarly, looser monetary policy – to support the UK economy – could be expected to drive down short-term bond yields.

For the majority of UK pension investors, we anticipate that a decline in domestic economic conditions could have negative implications – a reduction in non-investment income for DC investors and a weaker covenant for DB schemes. In addition, we typically expect that any decline in sterling could feed through into imported inflation, thus eroding an investor’s purchasing power.   We believe that the LGIM Diversified and LGIM Multi-Asset Funds are suitably positioned for the elevated level of risk expected at the end of June.

Firstly, we implement an asset allocation that is designed to be diversified across geographical regions, targeting around 20% of overall market risk in UK assets. We therefore expect that the Funds’ underlying assets will show a limited degree of sensitivity to any UK-specific risks.

Secondly, the Funds hold structural exposure to foreign currency of around 50%. In our opinion, holding foreign currency is a suitable way of aiming to provide investors with good results in those scenarios when financial markets predict a negative environment for the domestic economy.   As with every protection strategy, the Funds’ exposure to foreign currencies comes with potential downside if domestic economic risks don’t materialise.

Our current assessment is that sterling may be trading around 5% below its fair value (compared to a trade-weighted currency basket). On the other hand, sterling may fall an additional 10-15% in a negative economic scenario. In line with the Funds’ investment philosophy, we do not look to implement active investment views in the Diversified or Multi-Asset Funds on an on-going basis. At the same time, we are committed to reviewing and potentially adjusting the Funds’ asset allocation to adapt to any structural changes in markets.

Our assessment is that the Funds’ currency positioning implies potential downside of around 2.5% for the Funds versus potential upside of 5-7.5% if the Funds had 100% sterling exposure. With a view to the economic risks borne by the underlying investors and the long-term focus of the Funds, this performance trade-off seems appropriate to us.



Yours, Multi-Asset team


Key risks Investing in financial markets exposes investors to risk. These Funds invest in a wide range of asset classes, typically by investing in other funds. While this diversification aims to lower risk, each asset class has risks that may impact the value of the Fund. Any objective or target will be treated as a target only and should not be considered as an assurance or guarantee of performance of the Fund or any part of it.Further details (including relevant risk factors and fund specific risks) are available in the Description of Funds document, which can be obtained from your usual LGIM contact or by visiting



  Multi-Asset update: EU referendum



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About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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