Legal & General Investment Management (LGIM) has expanded its range of thematic exchange traded funds (ETFs) with the launch of three new funds focused on investment opportunities created by innovations in artificial intelligence, healthcare breakthroughs and clean water.
LGIM’s existing thematic and core ETFs, which include the €800m L&G Cyber Security Ucits ETF and €813m L&G Robo Global Robotics and Automation Ucits ETF.
The ETFs are designed to invest in markets that are experiencing the potential for rapid growth due to significant changes driven by technological advancements, the group said.
“To provide investors with exposure to these themes, LGIM has developed unique indices with industry experts at Robo Global and Global Water Intelligence,” it said.
The bottom-up and concentrated approach helps investors to minimise overlap and over-exposure across their existing portfolios, the group said. Across LGIM’s five pre-existing thematic ETFs, the average overlap in holdings with the MSCI World index is just 1.92% and the average weighting to small and mid-caps is 56%.
Artificial Intelligence technologies
Artificial Intelligence (AI) technologies could increase global GDP by €13.8trn by 2030 and the L&G Artificial Intelligence Ucits ETF will seek returns from the global market for AI solutions and applications, in which revenues are projected to grow from €14.3bn in 2018 to €27.6bn in 2025.
In terms of index exposure, the fund will include companies building AI engine and platform solutions, as well as those applying AI capabilities for the purpose of digital transformation.
Taking advantage of the opportunity in healthcare, which accounted for 18% of US GDP in 2017 and is anticipated to be an $8.7 trillion global industry by 2020, the L&G Healthcare Breakthrough Ucits ETF will be formed of companies involved in the digitalisation of the healthcare supply chain, advances in healthcare robotics and next-generation diagnostic tools.
By 2025, 1.8bn people will be living in countries or regions with absolute water scarcity; two-thirds of the world’s population could be living under water-stressed conditions4. Investors in the L&G Clean Water Ucits ETF will seek returns from an index which is focused on companies integral to the world’s management of water, including those engaged in water production, processing and the provision of other related services.
Howie Li, head of ETFs at LGIM, said: “All sectors and businesses are being transformed by disruptive technology and we’re seeing increasing demand from investors looking to access these themes in a cost-efficient way. These new funds offer investors the opportunity to hold companies directly benefiting from these themes, with bespoke indices constructed around active selection and research and implemented in a systematic and rules-based way.”