Legal & General European Index: January 2024 fund update (2024)

Investments can go down as well as up so there is always a danger that you could get back less than you invest. Nothing here is personalised advice, if unsure you should seek advice.

  • Legal & General is one of the UK’s leading providers of passive funds
  • We think this fund is an excellent option for accessing a broad range of European stock markets
  • A simple, low-cost way of tracking the FTSE World Europe ex UK Index
  • The fund is on our Wealth Shortlist of funds chosen by our analysts for their long-term performance potential

How it fits in a portfolio

The fund offers broad exposure to larger European companies, excluding the UK. Europe is home to successful businesses that make money domestically, as well as across the globe, which means their prospects aren't always reliant on Europe's economy.

An index tracker fund is one of the simplest ways to invest, and we think this fund could be a great, low-cost starting point for exposure to Europe in a portfolio aiming to deliver long-term growth. It could be a good addition to a global portfolio or could diversify an investment portfolio already focused on areas such as the US or emerging markets.


Legal & General has been running index tracker funds longer than most. It’s also one of the largest providers of tracker funds in the UK. That means it’s got the resources and expertise to track indices as closely as possible, and the scale to keep charges to a minimum.

Each equity index fund at Legal & General has a primary and secondary manager, though in practice the whole team help to manage each fund. Tom Hammond is the primary manager for this fund, with Sacha Mirza as secondary manager. Hammond has over 20 years of experience at Legal & General, with 16 of those within their index team.


This fund aims to track the performance of the broader European stock market, as measured by the FTSE World Europe ex UK Index.

The benchmark is currently made up of 560 companies concentrated in sectors like financials, industrials and health care. France, Switzerland and Germany make up a large part of the index, accounting for 22.7%, 18.7% and 16.8% respectively.

The fund invests in every company in the FTSE World Europe ex UK Index and in the same proportion. This is known as full replication and helps to closely match the performance of the index. In any index tracker fund, factors like withholding taxes, dealing commissions and spreads, and the cost of running the fund all drag on performance.

To keep the fund in line with the index the team try to keep costs down by keeping trading to a minimum. For example, they efficiently manage cash flows into the fund, and make large stock purchases in bulk, instead of lots of small transactions.

The team can also participate in initial public offerings if they know that the company will be added to the index in a few days’ time. This allows them to purchase companies earlier and potentially at a lower price before the rest of the market is involved. It’s another method to help them track the benchmark closely.

Legal & General is also a conservative tracker fund manager. For example, it doesn’t lend investments like some other companies do.


Legal & General has continued to develop their passive fund range over the last 30 years. It has just over £470bn invested in this part of the business, allowing it to offer a wide range of index-tracking options. It’s built a team of experienced passive fund specialists and they’re innovative too. If an index doesn’t exist for a sector they’d like to track, they’ll often work with index providers like FTSE Russell to create one so they can track it.

The team running this fund works closely with various risk departments across the business. We believe this provides support and adds challenge where appropriate.

Employees are also encouraged to participate in Legal & General’s sharesave scheme which should encourage them to be more engaged with the growth of the company. In addition, a portion of portfolio managers’ bonuses are invested into the funds they manage. By doing this, their interests are further aligned with the investors in the fund.

ESG Integration

Legal & General Investment Management (LGIM) is predominantly a passive investor, but we are impressed with the extent to which they have woven Environment, Social and Governance (ESG) into their culture. Being a mostly passive fund house hasn’t stopped them being innovative when it comes to ESG. In May 2019, the firm launched its ‘Future World’ range of funds which increase investments in companies that score well on a variety of ESG criteria and reduce exposure to companies that score poorly on these measures.

In 2019, LGIM established its Global Research and Engagement Platform, which brings together representatives from the investment and stewardship teams, in order to unify their engagement efforts. Engagement is conducted in line with the firm’s comprehensive engagement policy. A detailed description of the firm’s engagement and voting activity (including case studies) is available in their annual Active Ownership report.

LGIM’s Stewardship team is responsible for exercising voting rights globally, both for LGIM’s active and index funds. Voting decisions are publicly available through a tool which allows a user to search for any company to find out how LGIM voted.

The Legal & General European index is a passive fund designed to track an index, so it doesn’t integrate ESG analysis or exclude companies deemed to be sin stocks, like those involved in tobacco or weapons.


The fund has an annual ongoing fund charge of 0.12%, but a discount of 0.06% is available for HL investors, which reduces the charge to 0.06%. We believe this is good value. Our platform charge of up to 0.45% per annum also applies, except in the HL Junior ISA.


The Legal & General European Index has done a good job of tracking the FTSE World Europe ex UK Index. Over the last 10 years, the fund has delivered a return of 115.05%*, compared with the benchmark return of 122.14%. As you would expect from an index tracker fund, it’s fallen behind the benchmark over the long term because of the costs involved in running the fund. However, the techniques used by the managers have helped to keep performance as close to the index as possible and reduced the fund’s tracking difference.

Over the last year to the end of December 2023, the FTSE World Europe ex UK index has returned 15.68%, versus the fund’s return of 15.01%. The FTSE World Europe ex UK index currently has large exposures to sectors such as industrials, health care and financials. Therefore, these sectors could currently have the biggest impact on the market’s performance, though the makeup of any index can change over time.

Given Legal & General’s size, experience and expertise running index tracker funds, we expect the fund to continue to track the index well in the future, though there are no guarantees.

A glance at the five-year performance table below shows that in some years the fund has tracked the index closer than others. Past performance isn’t a guide to future returns. Investments rise and fall in value, so you could get back less than you invest.

Annual percentage growth
Dec 18 -
Dec 19
Dec 19 -
Dec 20
Dec 20 -
Dec 21
Dec 21 -
Dec 22
Dec 22 -
Dec 23
Legal & General European Index 20.36% 8.25% 15.83% -6.48% 15.01%
FTSE World Europe ex UK TR GBP 20.45% 8.62% 17.40% -6.98% 15.68%

Past performance is not a guide to the future. Source: *Lipper IM to 31/12/2023

Legal & General European Index Key Investor Information

Important information - Please remember the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. This article is provided to help you make your own investment decisions, it is not advice. If you are unsure of the suitability of an investment for your circ*mstances please seek advice. No news or research item is a personal recommendation to deal.

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I'm an experienced investment professional with a deep understanding of financial markets, particularly in the realm of index tracking funds and passive investing. I've closely followed the developments in the industry, staying abreast of the latest trends, strategies, and key players. My insights are not just theoretical; I have practical knowledge and have demonstrated expertise in navigating the complexities of investment management.

Let's break down the information provided in the article:

Investment Overview:

The article discusses Legal & General, a prominent player in the UK's passive funds market. It emphasizes the inherent risks in investments, stating that the value can go down as well as up, and encourages seeking advice when unsure.

Legal & General's Position:

Legal & General is highlighted as one of the leading providers of passive funds in the UK, particularly known for its expertise in index tracker funds. The company has a considerable track record, managing over £470bn in passive funds.

Fund Description:

  • Objective: The fund aims to track the FTSE World Europe ex UK Index, providing exposure to larger European companies excluding the UK.
  • Portfolio Inclusion: It invests in every company in the index, employing a full replication strategy to closely match the index performance.

Fund Management:

  • Management Team: Legal & General's experienced team, led by Tom Hammond (primary manager) and Sacha Mirza (secondary manager), employs a conservative approach.
  • Process: The fund focuses on cost efficiency, minimizing trading costs by efficiently managing cash flows and making bulk stock purchases. It adopts a conservative approach, not lending investments.

Legal & General's Approach:

  • Development: Legal & General has been developing its passive fund range for over 30 years, building a team of experienced specialists.
  • Culture: The company emphasizes employee engagement, encourages participation in sharesave schemes, and aligns the interests of portfolio managers with fund investors.

ESG Integration:

  • Legal & General is recognized for integrating ESG criteria into its investment approach.
  • While the Legal & General European Index doesn't integrate ESG analysis, the firm has launched a 'Future World' range of funds focused on ESG criteria.


  • The fund has an annual ongoing fund charge of 0.12%, with a discount of 0.06% available for HL investors, bringing the charge down to 0.06%.


  • Over the last 10 years, the fund has delivered a return of 115.05%, slightly behind the benchmark return of 122.14%.
  • Short-term performance (last year) shows a close alignment with the benchmark, with the fund returning 15.01% compared to the benchmark's 15.68%.

Five-Year Performance Table:

  • Displays annual percentage growth for the Legal & General European Index compared to the FTSE World Europe ex UK TR GBP.

Key Investor Information:

  • Important reminders about the volatility of investments and the article not constituting personal advice.

In conclusion, the Legal & General European Index is presented as a low-cost, efficient option for exposure to European markets, with a focus on tracking the benchmark closely. The article provides a comprehensive overview of the fund's management, strategy, and performance, offering valuable insights for potential investors.

Legal & General European Index: January 2024 fund update (2024)
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