Legg Mason to launch US equity income fund as part of major drive into UK retail market
Legg Mason is to launch an ICVC version of its highly successful $4bn US equity income strategy as part of a major drive to expand its retail fund range in the UK.
Launching mid-Oct 2011, the Legg Mason US Equity Income Fund will be managed by New York-based ClearBridge Advisors, Legg Mason’s largest US equity subsidiary with $58bn under management*. The team managing the fund is Hersh Cohen, ClearBridge CIO, Peter Vanderlee, managing director and portfolio manager and Michael Clarfeld, managing director and portfolio manager, all of whom manage the US equivalent strategies.
The fund, the first product launched by Legg Mason into its UK ICVC range in three years, will utlilise ClearBridge’s ‘US Equity Income Builder’ strategy. Whose composite has delivered an average annual return of 11.08% since inception in September 2008 with volatility of 13.16%¹. Over the same period, the Russell 3000 Value Index has returned 2.10% with volatility of 23.59%.
Leveraging ClearBridge’s fundamental research-led investment process, the fund will aim to generate sustainable income by concentrating on high quality companies that are currently paying an attractive dividend yield and have the capacity to grow their income stream over time. With strict risk controls on a sector and stock basis, the fund will focus on companies with higher margins and returns on investment than their peers.
Legg Mason and ClearBridge believe there are now significant income opportunities for UK investors in the US market, where, due to increasing investor pressure, growing numbers of companies, across a greater number of industries are paying constant and rising dividends. Indeed, US dividend payouts so far this year have already surpassed full-year payouts in 2010, an increase of $26.5bn.**
Commenting on the launch, Adam Gent, Head of UK Sales, Legg Mason, says: “The ClearBridge team has a long term track record in managing income generating portfolios, and the US Equity Income Builder Strategy has been a fantastic success in the US both in terms of investor interest and performance. It is perfectly placed to benefit from the growing propensity for US companies to pay and raise dividends.
“UK investors have typically shied away from the US for income but US companies have never been in better health and are currently sitting on approximately $2tr of cash, much of which will be returned to shareholders as domestic demand for income continues to grow. Moreover, investing in US equity income provides a far more diverse income stream and less stock specific risk than most UK equity income strategies.
“The UK retail market will be a key focus for us in the coming years and the launch of this fund on our onshore ICVC platform demonstrates our commitment to offering UK investors access to our leading strategies in the format they demand. In addition to this fund, we will continue to develop our range in the UK market wherever we are best able to leverage the specialist expertise of our subsidiaries for the benefit of investors.”