Lonsec awards ‘Highly Recommended’ Rating to the Legg Mason Martin Currie Real Income Fund and Active ETF

In its most recent sector review, Lonsec has upgraded the Legg Mason Martin Currie Real Income Fund rating to ‘Highly Recommended’.

Launched in 2010, Legg Mason Martin Currie Real Income Fund has built a long-term record of success in delivering high, sustainable and growing income alongside capital growth. In pursuing its objectives, the Fund invests in a mix of Australian listed companies that own hard, physical assets, such as property, utilities and infrastructure.

Its Active ETF version – the Betashares Legg Mason Real Income Fund (managed fund) (ASX: RINC) has also been awarded ‘Highly Recommended’ rating and was listed on the ASX in February 2018.

Supporting the ratings is Lonsec’s “high regard for the Martin Currie Listed Real Assets investment team” and “the disciplined investment process”.

Lonsec notes that the “Real Assets team are very experienced, and the portfolio managers have good tenure of working together”.  Ashton Reid is the Lead Portfolio Manager of the Fund is supported by Andrew Chambers and the broader investment team based in Melbourne and led by CIO, Reece Birtles.

In its report, Lonsec made note of the ESG integration within the Fund stating: “The Manager has clearly articulated a strong commitment to the integration of ESG within their investment process with a strong policy framework and clear public positioning.”

“Overall Lonsec views the strength of this commitment to be well above peers.  Lonsec’s review of the overall level of disclosure with respect to the Manager’s proxy voting and engagement, policies and reporting are assessed as industry leading, with particular credit paid to the details and clarity provided in the Manager Proxy Voting Policy.”

They added: “The Portfolio Managers demonstrated an ability to engage on broad ESG topics, and that the Manager could demonstrate clear ESG based engagement outcomes. Importantly, there was clear evidence that ESG considerations were at the forefront of proxy voting decisions. The Manager had a well-structured approach to the collection and use of ESG specific data supported by a dedicated three person ESG team.

Overall, on a peer relative basis, Lonsec considers the overall level of ESG integration within this fund to be ‘High’.”

Commenting on the strong long-term performance record, Lonsec notes: “The Fund has delivered a three-year total return of 11.4% p.a. (all figures net of fees) to 31 December 2019. Relative to the reference index consisting of 50% A-REIT /40% Utilities /10% Infrastructure, the Fund out-performed by +3.17% p.a. over this period. Over the same period, the Fund outperformed the Lonsec peer group median by 1.4% p.a. For calendar year 2019, the Fund achieved a net total return of 21.85% outperforming the reference index by +3.75% (both figures net of fees). The income component of the gross return was 5.8%, in excess of the Fund’s objective of 120% of the yield of the Benchmark (approx 4.3%).”

Ashton Reid, Portfolio Manager, Legg Mason Martin Currie Real Income Fund said: “With record low bond yields and heightened equity market volatility, these are challenging times for investors looking for stable and growing income streams. In this environment, we believe that ‘Real Assets’ remain the tangible building blocks of the economy that are used every day (even in a recession) and can offer compelling lower-risk income exposure.  Loner-term growth continues to be underpinned by the strong population and urbanisation rather than being directly dependent on the business cycle.”

Andy Sowerby, Head of Australia for Legg Mason concluded: “The Legg Mason Martin Currie Real Income Fund is an innovative, differentiated and proven investment strategy with a track record dating back almost a decade. It has been designed to provide an attractive income stream that grows over time and this has never been more needed than today. We are delighted that Lonsec has recognised this Fund with their highest possible rating of ‘Highly Recommended’.”