LGIM America

As we look into the new year, we can't forget to reflect on the year we're leaving behind. We appreciate our clients and friends that have worked with us throughout 2024, and we look forward to the year ahead. Best wishes for a safe and healthy holiday season and a joyous new year.

Investors should be prepared for a more nuanced landscape—one where opportunities exist, but the margin for error has narrowed. In such a world, flexibility will be key to navigating the shifting narratives that continue to shape markets. In the private credit context, investors may want to consider moving up the risk spectrum into investment grade private credit to capture the potential benefits of the asset class with more favorable exposure to leverage and certainty of cashflows. Read our latest blog by Dan Dreher: https://ow.ly/FB7X50Uablg

For the seventh consecutive year, LGIM America has been recognized in Pensions & Investments' Best Places to Work in Money Management program! Thank you to our employees for remaining committed to nurturing our collaborative, diverse, inclusive and client-centric culture, which makes this firm one of the best places to work. We’re proud of LGIM America employees for living our values and doing good for our clients and each other every day.   https://lnkd.in/gH3W_BbM   Pensions & Investments award: P&I listed LGIM America as one of the “Best Places to Work in Money Management” for 100-499 employees. LGIM America did not compensate Pension & Investments for this award. More detailed information regarding the survey methodology and tabulation of results can be found at: https://lnkd.in/ej7jBbP5

This week was our annual Charity Week! The goal of Charity Week is to show employees how to become involved with volunteering in the community. One way we encouraged them to do this is by donating toys to Chicago Commons this holiday season. Staff from the organization also joined us for hot cocoa and cookies, and shared who the toys are benefitting. In addition, attendees had some friendly competition by rolling dice to build a snowman the quickest! Between toys that were brought into the office and purchased directly from the wish list, our employees donated over 100 toys! Thank you to everyone who gave back!

Treasury & Risk published an article written by Andrew Carter, Sabrina R. and John Southall PhD, FIA. The article highlights how navigating interest rate risk in cash balance plans with floors is crucial for companies transitioning from traditional defined-benefit pension plans. The binary method, which simplifies valuations, often understates liabilities, leads to suboptimal hedging strategies and can suffer practical problems. Delta hedging, on the other hand, offers a nuanced view of interest rate risk, reflecting the true economics of cash balance liabilities. By adopting a liability-driven investment (LDI) hedging solution, plan sponsors can better align their strategies with the complex sensitivities of cash balance plans. Read the article: https://ow.ly/wQ5R50Ugbo0

LGIM America's Pension Solutions Monitor, which estimates the health of a typical US corporate defined benefit pension plan, estimates that pension funding ratios increased throughout November 2024. Based on market movements, the average funding ratio is estimated to have increased from 109.9% to 111.5%. Equity markets experienced positive performance over the month with both global equities increasing 3.8% and the S&P 500 increasing 5.9%. Plan discount rates were estimated to have decreased 9 basis points over the month driven by the Treasury component falling 7 basis points and the credit component tightening 2 basis points. Plan assets with a traditional “50/50” asset allocation increased 2.9% while liabilities increased 1.5%, resulting in an increase to funding ratios by November month-end. Read our PSM newsletter: https://lnkd.in/gGwxxhd Please view webpage for complete disclosures.

Those of us at LGIM America are especially grateful for our clients and friends during this season of gratitude. We wish you a happy and healthy Thanksgiving Season.

Kara Goodbrand, Head of Talent Acquisition, attended the Legal & General Annual Awards at the London Natural History Museum. Kara was chosen as a finalist in the ‘Diversity and Inclusion’ award category for her commitment and leadership in driving diversity and inclusion initiatives across the business. The event was an incredible celebration of talent, innovation and hard work across the business, and we’re proud of Kara for being recognized for the significant impact she has made to colleagues and beyond. Congratulations to every nominee!

The combination of ongoing solid economic growth, moderating inflation and the first interest rate cut of the cycle largely explain the improvement in CRE performance. Signals of a cycle bottom have been emerging since the beginning of 2024. More recently, roughly half of investors polled by CBRE are expecting a big improvement in transactions during the first half of 2025. Read more highlights from Martha Peyton in our Real Estate Pulse newsletter: https://ow.ly/MZ8b50UcMKQ Please view the newsletter for complete disclosures.

We had nearly 60 employees join us for the second Hack-AI-thon! Colleagues were invited to the two-day event that gave an introduction to artificial intelligence (AI) capabilities and accelerators. Participants were tasked with coming up with innovative solutions for products and processes using the latest generative AI technologies. Open to everyone, the Hack-AI-thon teams brought together people from different areas of the business and technology to gain hands-on experience and training with AI. Thank you to our coaches at Synechron and support from Microsoft who were on site to ensure a successful event!