Zenith upgrades the Legg Mason Martin Currie Equity Income Fund rating to ‘Highly Recommended’
In its most recent sector review, Zenith Investment Partners (Zenith) has upgraded the Legg Mason Martin Currie Equity Income Fund rating to ‘Highly Recommended’.
Launched June 2011, the Legg Mason Martin Currie Equity Income Fund has since been at the forefront of retirement income solutions in Australia. The objective of the strategy is to provide a sustainable and growing income stream and to deliver total returns with less volatility than the broader equity market.
Since inception, the Fund has exceeded its aim to provide a total income stream that is higher than that of the S&P/ASX 200 and has also delivered this income with lower volatility than the Australian share market[1].
The Zenith report stated: “The Martin Currie Australian (MCA) equities team is headed by Chief Investment Officer, Reece Birtles. Birtles is an experienced portfolio manager, having managed equity portfolios both domestically and abroad. Birtles is supported by the broader MCA equity team which includes ten fundamental research analysts and two team members focused on quantitative research.
“The research effort is structured to identify companies that can deliver a sustainable, inflation protected income stream. The investment team typically adopts a more conservative approach when determining a company’s “through the cycle” dividend payment, with the forecasted dividend being reflective of the free cash flows the company is likely to generate at the bottom of the economic cycle. Zenith believes MCA’s research process is well established, appropriately blending the analysts’ fundamental insights with internal quantitative directional tools.”
Reece Birtles, lead Portfolio Manager for the strategy and key architect of Martin Currie’s retirement solutions, noted that the upgrade neatly coincided with the 10-year anniversary of Martin Currie’s focus on income oriented solutions.
He said: “Ten years ago we set a goal of helping our clients access a better income stream to facilitate a better standard of living. The objective was to offer lower income variability, provide inflation protection and to provide good income and capital growth for longevity. This rating upgrade represents an important recognition of both our results to date and perhaps more importantly, the process we’ve put in place to continue to provide for our clients for the future.”
Zenith also focused on the Fund’s flexibility as an important aspect of differentiation.
Zenith noted: “As a result of the Fund’s income target, it is not constructed with reference to a benchmark and is expected to hold between 40 and 60 companies. Consistent with the Fund’s inflation protection mandate, Birtles will seek to diversify the Fund’s revenue sources to companies whose revenues are more closely linked to domestic economic growth and the level of inflation.
“Overall, Zenith views the portfolio construction process to be complementary to the fundamental research process, which appropriately combines the stock research performed by the analysts and Birtles’ construction skills.”
Legg Mason Managing Director, Andy Sowerby, said: “The decision to upgrade the rating of the Legg Mason Martin Currie Equity Income Fund to ‘Highly Recommended’ recognises the strong product design underpinned by a world-class investment team and a proven investment process. It is pleasing to note Zenith views this Fund as their preferred option in the Equity Income sector.”
Overall assets in the Equity Income strategy are AUD $6bn with AUD $215.3 million in the local Fund (as of 30 June 2020.)
The Fund is also available as an Active ETF – the BetaShares Legg Mason Equity Income Fund (managed fund) (ASX: EINC).
Key features of the Fund include:
- Aims to deliver a growing income stream by investing in quality Australian listed companies
- Strong focus on income growth to protect purchasing power
- Seeks to extract the full benefits of franking credits for zero tax rate payers
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