- Legg Mason Brandywine Global Enhanced Absolute Return Fund is a “best ideas” fund
for global fixed income investors
- Primary focus on sovereign debt and currencies
- Concentrated portfolio which can take long and short positions in fixed income securities and currencies to generate returns
LONDON, August 21, 2018 – Legg Mason Inc, one of the world’s largest active asset management firms with $754 billion AUM, has expanded its range of unconstrained fixed income funds with the launch of the Legg Mason Brandywine Global Enhanced Absolute Return Fund.
Domiciled in Dublin, the actively managed, unconstrained fixed income fund is based on a global unconstrained enhanced bond strategy managed by Brandywine Global since 2012. It seeks positive absolute returns independent of market conditions and aims to outperform the FTSE 3-Month T-Bill Index by 600 bps per annum, net of fees, on a rolling 36-month basis*.
Managers David Hoffman, Steve Smith, Jack McIntyre and Anujeet Sareen hold a concentrated portfolio of Brandywine Global’s best ideas in global fixed income markets, with a primary focus on sovereign debt markets and currencies. This practice sees the team targeting three primary sources of alpha, or the three ‘Cs’, of country, currency and credit.
They use a top-down, macro-driven and value-oriented investment process to identify long or short exposures to countries and currencies, as well as allocations to other fixed income sectors.
The fund may take long or short exposures in both investment grade and non-investment grade segments, depending on which markets the team views as overvalued or undervalued. Overall portfolio duration can run within a range between -10 and +10 years, providing the potential to generate positive returns in a rising rate environment.
The primary focus is on global sovereign debt in both investment grade and non-investment grade quality segments, but corporate bonds and structured credit will also be used when the team believes there are attractive value opportunities.
Long positions are concentrated in 10 to 20 markets with the highest return potential, with fundamental factors, secular trends, political and monetary conditions, and business cycle risks driving the country-weighting process.
At launch**, the fund’s three largest country weightings are the US (39.2%), Mexico (13.9%) and Malaysia (6.7%). The top currencies include the US Dollar (48.6%), the Mexican Peso (13.9%) and the Swedish Krona (12.2%).
The fund’s active currency management is unhedged and focused on real interest rates, currency valuations and the impact of currency valuations on economic conditions and inflation.
Commenting on the launch, David Hoffman says:
“The environment for fixed income investors is finally changing following a decade of record low rates. For investors, this shift provides return-generating opportunities. This unconstrained fund allows us the flexibility to go wherever we see the best return potential with a view to exploit bond markets and currencies that we’ve identified as either over or undervalued.”
Alex Barry, Head of UK Distribution at Legg Mason, says:
“We believe the Legg Mason Brandywine Global Enhanced Absolute Return Fund, which is based on the successful global unconstrained enhanced bond strategy the team has managed in the US since 2012, is the ideal solution in the current rising rate environment. For clients who need to maintain their fixed income exposure, the fund offers a true alternative approach with the potential to provide portfolio diversification along with protection and continued returns even as rates start to climb around the world.”
 As of 31 March 2018