Zenith gives three Legg Mason bond funds strong ratings


Independent research house Zenith has given strong ratings to three bond funds being offered to the Australian retail market by the multi-affiliate global fund manager Legg Mason.

The newly launched Legg Mason Western Asset Global Bond Fund was rated ‘Recommended’, the Legg Mason Western Asset Macro Opportunities Fund ‘Recommended’, and the Legg Mason Brandywine Opportunistic Fixed Income Trust got the rating of ‘Highly Recommended’. Both Western Asset and Brandywine are 100%-wholly owned affiliates of Legg Mason.

Legg Mason Australia and New Zealand Managing Director Andy Sowerby says, “Zenith’s ratings for the three funds is an “excellent outcome” and certainly justifies the decision to “expand our bond offering to the Australian retail market”.

“There is a growing awareness among retail investors, especially in a low interest rate environment, about the capacity for bonds to generate income and capture capital appreciation, and the active management underpinning all three funds aims to achieve these two goals.”

The Legg Mason Western Asset Global Bond Fund was launched for investors, in December 2016, while the Legg Mason Western Asset Macro Opportunities Fund had a September 2016 start date. The Legg Mason Brandywine Opportunistic Fixed Income Trust has been on offer since March 2011.

For the two Western Asset funds the Zenith research identifies the high quality and experienced investment team as a key factor in their respective ratings.

The team’s investment philosophy is to generate returns from diversified resources that are identified through a fundamental, value-based process. As Zenith explains, “through an unconstrained approach, Western Asset Management is permitted flexibility to implement their highest conviction views in areas of the market that are displaying the greatest value, enhancing return generation relative to traditional benchmarks.”

In regards to the Legg Mason Western Asset Global Bond Fund, Zenith says: “[It] provides investors with exposure to an actively managed portfolio of global fixed income securities. WAM employs an attractive ‘hub and spoke’ structure, where a Global Investment Strategy Committee (GISC) provides centralised views on key decisions such as duration, yield curve, sector selection and currencies, while specialist teams are responsible for populating the targeted exposures. In Zenith’s opinion, the Fund successfully combines the rigour of WAM’s topdown process, yet still allows the portfolio managers sufficient latitude to utilise their trade expression skills with relative value opportunities.

Western Asset, one of the largest fixed income specialists globally, manages $US8.2 billion in the Legg Mason Western Asset Macro Opportunities Fund at 31 December 2016. With this Fund, Zenith identified its “dynamitic nature” that is “expected to have multiple drivers of return through time, and exhibit lower correlations to the traditional fixed income benchmarks.

“The Fund will also seek to generate returns through the active management of yield curve, duration and volatility.”

Zenith described the Legg Mason Brandywine Opportunistic Fixed Income Trust as having a “high conviction, value-driven approach that predominantly seeks to generate returns from global sovereign bonds, as well as currency and credit”.

“Specifically, the Fund seeks to invest in the highest yielding, developed global bonds as well as tactically allocate to credit when spreads are attractive. Currency is also actively managed to both protect and enhance returns.”

“These new Zenith ratings reinforce Legg Mason’s active approach to fixed interest, giving investors a comprehensive range of bond funds to meet their specific investment goals,” said Sowerby.

He added “Our objective is to design and deliver truly differentiated solutions that help clients have the flexibility and control needed to achieve their investment goals. Legg Mason now offers a full range of fixed income solutions including domestic, global and unconstrained strategies that can assist investors meet their investment targets.”

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