Legal & General Investment Management recorded a 15.9% drop in assets under management in 2022 to £1.2 trillion ($1.45 trillion), as the money manager felt the impact of the market downturn and U.K. liability-driven investment crisis.
Total net inflows, which were driven by international inflows, totaled £46.6 billion for the year ended Dec. 31, compared to total net inflows of £28.3 billion in 2021.
Market impacts resulted in a total £271.5 billion loss for the year, vs. a £109 billion gain in 2021.
Assets under management in LGIM's largest business — solutions — fell 19.7% to £485.9 billion, impacted by market movements, which amounted to a £173.9 billion loss. However, the market-related loss was partially offset by total net inflows to the solutions business of £55.6 billion, up from £18.4 billion at the end of Dec. 31.
LGIM said in a financial update Wednesday that the sharp rise in gilt yields in September, following the announcement of the then-government's unfunded tax cuts, forced its clients to post increased collateral on derivative positions associated with LDI strategies, resulting in net outflows from active strategies of £8.3 billion.
"Over the course of 2022, we experienced positive flows into LDI but the firm's overall defined benefit revenue decreased as interest-rate rises caused assets under management to reduce and as clients sold higher fee-generating investments to meet collateral requests," the update said.
LGIM's index strategies also saw total net outflows, of £8.1 billion in 2022. Assets under management in index strategies dropped by 11.5% to £444.7 billion, while assets in active strategies fell 21% to £156.8 billion. However, the firm recorded net inflows from U.S. DB clients.
Assets in multiassets and real estate strategies fell 5.2% to £73.9 billion and 7.5% to £34.4 billion, respectively.
LGIM's total U.K. defined contribution AUM fell 2% to £135 billion at the end of 2022.