Legg Mason Global Asset Management is launching a global total return bond fund to be lead managed by Gordon Brown, Co-Head of Global Portfolios at subsidiary Western Asset, and supported by fellow portfolio manager Andrew Cormack.
The Legg Mason Western Asset Global Total Return Investment Grade Bond Fund is a Dublin-domiciled UCITS fund which will seek to generate positive returns by identifying relative value opportunities across global investment grade debt markets, and currencies.
The opportunistic bond fund invests without the constraint of a benchmark, using a combination of top-down global macro strategies and tactical sector allocation, as well as bottom-up security selection.
At a time when long-only fixed income investors face asymmetric risks from low yields on many government and corporate bonds, the fund is targeting a positive return over the long-term regardless of conditions in the wider bond market.
The fund, which has a focus on capital preservation and actively seeks to mitigate risk, will invest solely in investment grade bond markets which have historically suffered much lower defaults than high yield bonds. Given the focus on protection, the managers will seek to maintain the volatility of the fund between 4-6%.
Idea generation will be driven by Western Asset’s Global Investment Strategy Committee, chaired by CIO Ken Leech, and will leverage the regional and sector expertise of the group’s 129 investment professionals across its seven global investment offices.
A benchmark-unaware approach allows Brown and the team the latitude to invest only where they see attractive relative value opportunities.
Brown believes the launch of the strategy at this point in the cycle gives investors the opportunity to benefit from the changing outlook for fixed income.
“Fixed income markets are at a very interesting juncture, with the potential for rate rises in the US countered by concerns over global growth, particularly in China,” he said.
“As such, financial markets should continue to be volatile, and therefore a flexible strategy that can exploit opportunities as they emerge could be an attractive addition to investors attempting to manage their fixed income exposure.”
The Legg Mason Western Asset Global Total Return Investment Grade Bond Fund has an AMC of 0.75% payable on the retail share class.