Change to the L&G Cash Fund
The Legal & General Cash Fund is being closed and existing investments are being transferred to a new Cash Fund. This change affects M Plan members who have investments in the Cash Fund and Defined Benefit members who may have ASCs or AVCs invested in this fund.
A copy of the announcement is included here:
The exceptional conditions that have been witnessed in investment markets over the past 18 months have shown that some investments, that were previously considered to be relatively secure, have seen falls in value. Whilst this has not been the case for the L&G Cash Fund which has matched its benchmark, the Trustee felt it appropriate to consider whether the fund is still the most suitable to offer members.
Having carefully reviewed alternative options with its financial advisers, the Trustee has received advice that it would be appropriate to change this option and, as such, has made the decision to offer members a new fund that the Trustee’s advisers consider to be lower risk - the L&G UK Treasury Bills Fund. This is an actively managed fund which has recently been launched to provide investors with the greater security of investing in high quality short-term investments issued by the UK Government.
The Trustee has therefore decided to close the existing L&G Cash Fund and transfer the investments to the L&G UK Treasury Bills Fund. The new fund will be known as the Cash Fund. The annual management charge is being reduced from 0.085% to 0.075% per year. The L&G factsheet about this fund can be found here.
Members should be aware that following the falls in interest rates, cash fund returns are generally expected to be lower in the short to medium-term. As the new Cash Fund invests in lower risk investments than a typical cash fund, this will also mean lower returns. However, whilst the new fund is lower risk, in the current environment there can be no guarantee that the value of the fund cannot fall.
The structure of the new Cash Fund is being set up in such a way that future changes to the underlying fund or manager can be introduced, if appropriate. Any change will be announced in advance.
Click here for the Q and As about this change.
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Last Updated: 28/08/2009
