Legg Mason’s boutique launches pair of fixed income funds
Western Asset, part of Legg Mason, has launched two flexible fixed income funds, the Legg Mason Western Asset Multi-Asset Credit and the Legg Mason Western Asset Global Total Return Investment Grade Bond funds.
The Legg Mason Western Asset Multi-Asset Credit fund is managed by Christopher Orndorff who is based in Western Asset’s Pasadena, California office.
The strategy aims to target an attractive income from a portfolio of global high income securities while protecting against tail-risks.
Orndorff has been running the strategy since October 2010, which invests predominantly in investment grade and high yield credit, and emerging market debt, as well as bank loans, structured securities, inflation-linked bonds and government bonds.
The fund also seeks to minimise the downside risk to investors in the event of a credit market sell-off by employing a range of hedging strategies.
Returns with a volatility budget of 5-7% are being targeted by combining a globally diversified portfolio with tail risk protection.
The fund was launched on 31 December 2015 with assets of over £100m (€131.4m).
The Legg Mason Western Asset Global Total Return Investment Grade Bond fund is managed by a London-based team headed by Gordon Brown and Andrew Cormack.
It seeks to maximise total return, while maintaining a focus on liquidity and preservation of capital, with volatility expected to remain below 6%.
The fund aims to maximise returns from investment-grade rated bonds and currencies by combining a wide range of global macro strategies with selected credit and other spread sector investments.
It will take an opportunistic approach to selecting credits holding a variety of higher-rated bonds issued by both companies and governments around the world, in both developed and emerging markets.
The fund will also have exposure to foreign currencies, with up to 25% in unhedged non-US dollar assets or currencies, and will use derivatives where appropriate, to maximise returns and manage portfolio risk.
The managers have the discretion to adopt a negative duration position to protect portfolio returns during periods of bond market declines.
Adam Gent, head of UK Sales at Legg Mason, said: “Fixed income investors find themselves at a crossroads in 2016, with the recent rate rise in the US, and the potential for further action from some other central banks globally, creating both opportunities and risks.”
“In such an uncertain environment, capital preservation is likely to be a priority for fixed income investors, but this does not mean they have to sacrifice income.”
Legg Mason had assets under management of $671.5bn (€618.6bn) as of December 31, 2015.