Legg Mason mfunds A NEW WAY TO ACCESS MANAGED FUNDS

Transcription

1 Legg Mason mfunds A NEW WAY TO ACCESS MANAGED FUNDS Q4 2016

2 THE BUILDING BLOCKS OF INVESTMENT EXCELLENCE The Legg Mason way Legg Mason is one of the world s leading asset managers and is dedicated solely to managing money. Since its founding in 1899, Legg Mason has built a strong heritage and manages US$710 billion * on behalf of institutional and retail clients. Legg Mason s presence extends worldwide with 40 offices around the world employing over 3,400 staff. *As at 31 December 2016 Legg Mason funds under management 24% Equity 10% Alternative 12% Liquidity 54% Fixed Income Simplicity and focus The Legg Mason business model is simple and uncompromised: Legg Mason as the parent company can provide product, marketing and sales support for its fund manager subsidiaries, but does not interfere with their investment process and decision-making. Legg Mason remains focused on funds management and is not distracted by other services such as broking, investment banking or platform distribution. Specialised expertise The most distinctive feature of Legg Mason is its specialised approach to managing money. It houses 9 prestigious fund managers, each focusing on its own area of expertise. It s not often that a single investment brand can bring with it a collection of high-calibre names such as Brandywine, Clarion Partners, Clearbridge, EnTrustPermal, Martin Currie, QS Investors, RARE Infrastructure, Royce & Associates and Western Asset. Each of these firms is a subsidiary of Legg Mason. LEGG MASON MFUND PRODUCTS Legg Mason is proud to be a foundation member of the mfund Settlement Service. What is the mfund settlement service The mfund Settlement Service is a leading innovation from the ASX that allows an investor to buy and sell units in selected unlisted managed funds ( mfund products ). The service negates the need for a long paper based application form, enabling investors to finalise an electronic transaction. Legg Mason mfund products ASX code Asset class Inception date Researcher ratings Legg Mason Martin Currie Equity Income Trust Legg Mason Martin Currie Real Income Fund LMA01 Australian equities June 2011 LMA02 Real assets December 2010 Lonsec / Highly Recommended Zenith / Recommended Lonsec / Recommended Zenith / Recommended Legg Mason Martin Currie Small Companies Trust LMA03 Australian small companies July 1996 Legg Mason Western Asset Australian Bond Trust LMA04 Fixed income October 1998 Lonsec / Highly Recommended Zenith / Highly Recommended Legg Mason Martin Currie Multi Asset Retirement Income Trust Legg Mason Diversified Trust LMA05 Multi-Asset May 2014 Lonsec / Recommended LMA06 Multi-Asset May 1996 Lonsec / Recommended Legg Mason Brandywine Global Opportunistic Fixed Income Trust LMA07 Global fixed income March 2011 Lonsec / Highly Recommended Zenith / Highly Recommended 2

3 A NEW WAY TO INVEST How can you buy units in an mfund? To invest in an mfund product, investors must place a buy order for units in that fund. This simply involves the investor lodging an order for units with their stockbroker or via a financial adviser who uses a stockbroking service on the investor s behalf. This transaction is then managed between the broker and the mfund issuer s registrar via ASX s CHESS settlement system. Detailed steps are outlined at All mfund products are unlisted managed funds. Being unlisted means that they are not directly traded on ASX. Instead, purchases and sales of units in the fund are made between the investor and the managed fund Issuer s unit registry. Investors do not trade units with other investors; rather, the process is facilitated by a settlement system (CHESS) owned by ASX. The price of units is set by the fund manager and not on a traded market, as is the case in share transactions. Who will use the mfund settlement service? The mfund settlement Service is designed for retail investors who invest in managed investment schemes and want the benefit of electronic settlement and consolidated reporting. To invest in a Legg Mason mfund, contact your adviser today or contact an mfund broker at mfund/brokers.htm BENEFITS FOR INVESTORS Access to a broad range of unlisted managed funds through a central hub and through their existing stockbroker, adviser or accountant relationship. Potential to enhance returns through exposure to a wider range of asset classes and by accessing the services of professional fund managers. Easier transaction and administration of unlisted managed fund investments, including the ability to use their existing stockbroking account to access unlisted managed funds. More-timely access to a wider range of information about unlisted managed funds, including unit prices and related announcements. Same high level of settlement certainty investors enjoy with shares. A holistic view of investments held through ASX under a single CHESS HIN. Easier to change between unlisted managed fund investments. Easier to see the value of an entire portfolio using investment administration software tools. BENEFITS FOR ASX BROKERS AND ADVISERS Ability to group clients share, managed fund and other investments under common HINs. Simple, all-electronic application and sales processes. An easier way for clients to move between funds. 3

4 Legg Mason Martin Currie EQUITY INCOME TRUST Fund facts Reece Birtles Chief Investment Officer Martin Currie Australia Most Australian equity funds are designed for wealth accumulators. Our Trust is designed to meet the needs of retirees and other low-tax payers. It aims to deliver an attractive, tax-effective income stream that can grow greater than inflation. Trust inception date June 2011 Return Objective To provide an annual franked income of more than 25% in excess of the S&P/ASX 200 Index yield before fee and taxes. Quarterly Management Costs (Class A) 0.85% as at 30 June 2015 The Legg Mason Martin Currie Equity Income Trust is designed to provide a growing and sustainable income stream by investing in high quality listed companies. The Trust aims to provide lower risk than the broader equity market through a portfolio of holdings diversified across around 50 securities and sector allocations that reflect consumer spending patterns. High yielding, quality companies Aims to deliver an attractive and sustainable income by investing in high quality Australian companies. Four ways to grow the income stream 1) Natural dividend growth; 2) active selection of companies we believe have the quality and potential for long term capital growth; 3) a unique distribution with net capital gains re-invested; and 4) a natural bias to sectors we believe match consumer spending patterns, such as consumer spending and property. Lower volatility than the sharemarket index Greater stability of capital and income through active stock selection and low stock and sector concentration. No derivatives A transparent and cost effective investment approach that does not use derivatives. 12 month yield comparison to December 2016 Distribution Yield (%) % Legg Mason Equity Income 5.9% S&P/ASX200 Franked Yield Franking 2.5% Best Term Deposit $10,00 invested for 1 year. Source: Martin Currie Australia, RBA. Distribution 1 yr 3 yrs 5 yrs Trust (net) Trust (gross) Performance components 1 yr (%) Distribution return Franking credit Income return (post fees and tax) 6.5 Growth return (incl re-invested cap gains) 9.1 Total gross return Under FSC Standard 6 methodology, the Trust s Distribution return would have been 6.3%. The difference between this and the reported Distribution return is due to the exclusion of capital gains and inclusion of franking credits. 2 Franking credit is based on the Trust distribution and assumes a zero tax rate. It is not to be interpreted as the offset achieved by unitholders during this period. Past performance is not indicative of future performance. 4

5 Legg Mason Martin Currie REAL INCOME FUND Fund facts Ashton Reid Portfolio Manager Martin Currie Australia Very few products in Australia offer our combination of real assets, which in turn provides a unique investment solution not possible from a stand-alone listed property or infrastructure fund. Trust inception date December 2010 Return Objective To provide an annual income of more than 20% in excess of the S&P/ASX 200 Index Unfranked Yield before fees & taxes. Quarterly Management Costs (Class A) 0.75% as at 30 June 2015 The Legg Mason Martin Currie Real Income Fund invests in a diversified portfolio of ASX-listed companies that hold real assets such as property trusts, utilities and infrastructure. The Fund is designed to provide investors with an attractive income stream that can grow in line with the cost of living and with lower capital volatility than the broader equity market. Sustainable income, protection from inflation Provides income that is expected to rise with the cost of living as underlying real-asset businesses increase their revenue streams. Lower-than-sharemarket volatility Aims to achieve volatility 20% below the ASX200. Liquid and transparent Avoids structured or engineered securities and focuses on assets listed and traded on the Australian Stock Exchange. Australian focus Invests only in Australian listed names with a high proportion of revenue derived in Australia. Lower concentration than A-REITs The Fund has a broader investible universe than the A-REIT market. 12 month yield comparison to December 2016 Distribution Yield (%) % Legg Mason Real Income 4.5% S&P/ASX200 Unfranked Yield Franking $10,00 invested for 1 year. Source: Martin Currie Australia, RBA Distribution 2.5% Best Term Deposit 1 yr 3 yrs 5 yrs Trust (net) Trust (gross) Performance components 1 yr (%) Distribution return Franking credit Income return (post fees and tax) 6.6 Growth return (incl re-invested cap gains) 9.4 Total gross return Under FSC Standard 6 methodology, the Fund s Distribution return would have been 7.2%. The difference between this and the reported Distribution return is due to the exclusion of capital gains and inclusion of franking credits. 2 Franking credit is based on the Fund distribution and assumes a zero tax rate. It is not to be interpreted as the offset achieved by unitholders during this period. Past performance is not indicative of future performance. 5

6 Legg Mason Western Asset AUSTRALIAN BOND TRUST Fund facts Anthony Kirkham Head of Investment Management Western Asset Australia The Australian bond market is continually evolving and a significant recent development has been the increase in issuance from Australian corporations in the local bond market. Recent long dated issues from corporations such as Telstra, Australian Pipeline Trust and the major banks have increased the depth and function of the Australian credit market. Trust inception date October 1998 Return Objective 0.75% pa above benchmark over 3 years before fees. Monthly Indirect cost ratio (Class A) 0.382% as at 30 June 2015 The Legg Mason Western Asset Australian Bond Trust is managed by Western Asset, one of the largest fixed income managers in the world. Western Asset has specialist teams dedicated across the full spectrum of fixed income investing. The Trust is designed to maximise the investment opportunities from Australian fixed income as well as promote the defensive attributes that fixed income offers. In a diversified investor portfolio the Trust can easily be blended with more aggressive investments like equity funds. 1 yr 3 yrs 5 yrs Trust (net) Trust (gross) Benchmark * Source: Legg Mason * Bloomberg AusBond Composite Index. Formerly the UBS Australia Composite Bond Index. Bloomberg Finance L.P. and its affiliates (collectively Bloomberg ) do not approve or endorse this material and disclaim all liability for any loss or damage of any kind arising out of the use of all or any part of this material. Past performance is not necessarily indicative of future performance. Experience Western Asset has been investing in fixed income markets since Global scale Specialist teams dedicated to all aspects of fixed income management. Large team Australian fixed income team backed by a global team with 195 investment professionals. Single focus One of the few Australian fixed income products with a fund manager that specialises in fixed income. Performance record The Trust has a solid track record against the benchmark and fixed income peers. 6

7 Legg Mason Martin Currie SMALL COMPANIES TRUST Fund facts Trust inception date July 1996 Shane Livingstone Portfolio Manager Anthony Porto Co-Portfolio Manager Australian small companies are often at an early stage of rapid growth but can be more volatile and less liquid than larger companies. They often lack broad research coverage due to their size and perceived risk. We believe we can exploit this opportunity by identifying companies at the early stage of this growth curve. Return Objective 5% p.a. above benchmark over three years before fees. Benchmark S&P/ASX Small Ordinaries Accumulation Index Six monthly Indirect cost ratio (Class A) 1.88% as at 30 June 2015 The Legg Mason Martin Currie Small Companies Trust invests primarily in Australian listed companies outside the S&P/ASX 100 Index. The Portfolio Manager aims to exploit the inefficiencies of the small cap market to provide higher levels of alpha and capital growth when held over the long term. Extensive investment experience Portfolio managers Shane Livingstone and Anthony Porto have 46 years of combined investment experience. Long term performance The Australian small companies strategy has achieved a long-term track record of providing excess returns since its inception. Transparency in stock picking Investment discipline clearly links company research, portfolio manager judgment and the final portfolio. Top 10 holdings 1 yr 3 yrs 5 yrs Trust (net) Trust (gross) Benchmark Source: Legg Mason Past performance is not necessarily indicative of future performance. Aveo Group Iress Ltd Independence Group Super Retail Group Speedcast Intl Ltd Ardent Leisure MYOB Group Steadfast Group Eclipx Group Western Areas The stocks listed are for illustration purposes and are not intended as a recommendation to invest. 7

8 Legg Mason Martin Currie DIVERSIFIED INCOME TRUST Trust details Reece Birtles Chief Investment Officer Martin Currie Australia Legg Mason has been an innovator in the retirement income space for many years, and our multi-asset retirement income strategy reflects the continued evolution in our solution-based strategies. The Trust invests only in the most appealing asset classes from a retiree s perspective. Our philosophy is that this combination of investments will differ significantly from a wealth accumulator s optimal strategy in the multisector space. Trust inception May 2014 Investment objective To provide a total return of the Consumer Price Index plus 4% and to grow the income stream in line with CPI over 3 to 5 year periods. Quarterly Management cost 0.80% The Trust provides a ready made solution that invests in a blend of Australian real asset income, equity income and fixed income. The Trust is designed for retirees seeking a balanced fund style solution that is diversified across asset classes. Legg Mason takes care of the asset allocation. Income growth potential Exposure to low-risk growth assets is expected to grow the income stream above inflation over time, helping to protect purchasing power of retirees. Unique product offering Most multi-asset products are designed for wealth accumulators (pre-retirees), rather than post retirees. The Trust s blend of three asset classes is unique and designed to deliver a superior multi-sector solution for retirees. Investment flexibility with risk control The Trust has a neutral allocation between three major asset classes, but has the ability to overweight (up to 50%) the asset classes that are attractive on a yield, quality and value perspective, while underweighting unattractive asset classes. Franking credits an additional benefit Retirees and other zero per cent taxpayers can enjoy a tax credit benefit from franked dividends. Our analysis indicates this can increase returns for a retiree in the order of 1.8% per annum gross of fees. Composite benchmark 30% 30% 30% 10% Australian Shares S&P/ASX 200 Accumulation Index Real Assets 50% S&P/ASX 200 A-REIT Accumulation Index and 50% S&P/ASX 200 Utilities Index Australian Fixed Income Bloomberg AusBond Composite Index^ Cash Bloomberg AusBond Bank Bill Index 3 mth 6 mths 1 yr Trust (net) Trust (gross) Benchmark * Source: Legg Mason *Please refer to the PDS for full details. Past performance is not necessarily indicative of future performance. ^Formerly the UBS Australia Composite Bond Index. Bloomberg Finance L.P. and its affiliates (collectively Bloomberg ) do not approve or endorse this material and disclaim all liability for any loss or damage of any kind arising out of the use of all or any part of this material. 8

9 Legg Mason Martin Currie DIVERSIFIED GROWTH TRUST Fund facts Reece Birtles Chief Investment Officer Martin Currie Australia Legg Mason offers a distinguished multi-sector offering to the market. Rather than blending widely available external fund managers, we focus on bringing a holistic Legg Mason skill set to clients so they know what they are investing into. Legg Mason also focuses on the alpha skill of its individual fund managers, rather than trying to capture significant value in asset allocation, so this strategy may blend well with other offerings. Trust inception date May 1996 Return Objective The Trust aims to earn a before fees and taxes return (over rolling three year periods) in excess of a benchmark constructed in accordance with the neutral asset allocation. Six monthly Indirect cost ratio (Class A) 0.838% as at 30 June 2015 The Trust provides a unique line-up of Legg Mason s best of breed fund managers in one convenient, well diversified fund. Alpha where our edge lies Expected source of alpha is aligned to where Legg Mason s strength lies - manager skill is the prime driver of performance. Legg Mason global affiliate model A well diversified family of best of breed fund managers, all part of the Legg Mason group. Long track record One of the longest running multi-sector track record in Australia dating back to Low fees Cost effective for investors, use of Legg Mason managers helps keep operating costs down. Portfolio manager experience 17 portfolio managers contribute to the investment process, with 21 years average experience. Asset allocation (%) 1 yr 3 yrs 5 yrs Trust (net) Trust (gross) Benchmark * Source: Legg Mason *Please refer to the PDS for full details. Past performance is not necessarilty indicative of future performance. Asset Allocation Benchmark (neutral) Actual Australian Equities Property Securities Global Equities Australian Fixed Income Global Fixed Income 12 7 Alternatives 0 0 Cash 5 1 9

10 Legg Mason Brandywine GLOBAL OPPORTUNISTIC FIXED INCOME TRUST Fund facts David Hoffman Co-Chief Investment Officer Brandywine Global Our Global Opportunistic strategy searches the globe for attractive real yields as they present themselves, without being wedded to the fixed income benchmark. In contrast with many other fixed income fund managers, we see currency as an opportunity to add value. We combine currency and bond strategies to deliver a true opportunity set in this asset class. Trust inception date March 2011 Return Objective 2% pa above benchmark over 3-5 years before fees. Six monthly Indirect cost ratio (Class A) 0.714% as at 30 June 2015 Not all global fixed income managers are the same and Brandywine s points of differentiation is a real yield seeking style that is also unconstrained, opportunistic and benchmark agnostic. The flagship Legg Mason Brandywine Global Opportunistic Fixed Income Trust is managed to this investment style. High conviction Brandywine Global s conviction levels drive the composition of the Fund, not a benchmark. 1yr 3 yrs 5 yrs Trust (net) Trust (gross) Benchmark * Source: Legg Mason *Citigroup World Government Bond Index, hedged to AUD Past performance is not necessarily indicative of future performance. Active management Allows investors to gain overweight exposure to countries that are likely to outperform and underweight exposure to those who are likely to underperform. Top down approach The Trust seeks to capitalise on shifting geographic and macro trends. Currency as a source of returns Aims to take advantage of currency opportunities to enhance returns. Superior risk adjusted returns Designed to capture market upside but aiming to avoid market downside, and to provide long term performance. FUND MANAGER OF THE YEAR 2015 WINNER Global Fixed Income Access to high real yields With diversification outside of G3 countries. 10

11 MEET OUR INVESTMENT MANAGERS Martin Currie is an active equity specialist that builds global, stockdriven portfolios based on fundamental research. Martin Currie Australia, a division of Legg Mason Asset Management Australia Ltd. is an active Australian equity fund manager that was established in 1982 with the launch of the Australian Core Equity portfolio. Since that time, the firm s product and investment capabilities have grown to include a range of Australian equity trusts, multi-sector trusts as well as tailored portfolios for a growing number of institutional clients. Established 1881 Head office Funds managed globally (as at 31/12/2016) Edinburgh, Scotland A$19.9 billion Founded in 1971, Western Asset Management is one of the world's leading fixed income managers. With a focus on long-term fundamental value investing that employs a top-down and bottomup approach, the firm has nine offices around the globe and deep experience across the range of fixed income sectors. Established 1971 Head office Funds managed (as at 31/12/2016) Pasadena, USA US$426 billion Since its founding, Brandywine Global has pursued one investment approach: value investing. Through in-depth research studies and practical experience, the founding partners determined that value-style investing - whether in equity or fixed income markets, domestically or internationally - may provide excellent risk-adjusted returns over full investment cycles. Established 1986 Head office Funds managed (as at 31/12/2016) Philadelphia, USA US$65 billion RARE is a dedicated infrastructure investment manager focused on global listed infrastructure investments. Established in 2006, RARE has grown to become one of the largest listed infrastructure managers globally. Established 2006 Head office Funds managed (as at 30/06/2016) Sydney, Australia US$6.1 billion 11

12 leggmason.com.au IMPORTANT INFORMATION: Legg Mason Asset Management Australia Ltd (ABN AFSL ) (Legg Mason) is part of the Global Legg Mason Inc. group. Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. The information in this document is of a general nature only and is not intended to be, and is not, a complete or definitive statement of matters described in it. It has not been prepared to take into account the investment objectives, financial objectives or particular needs of any particular person. Legg Mason Australia does not guarantee the accuracy or completeness of this document. Before making an investment decision you should read the Product Disclosure Statement (PDS) for the Trusts carefully and you need to consider, with or without the assistance of a financial advisor, whether such an investment is appropriate in light of your particular investment needs, objectives and financial circumstances. The PDSs are available and can be obtained by contacting Legg Mason Australia on or at Neither Legg Mason Australia, nor any of its related parties guarantees any performance or the return of capital invested. Past performance is not necessarily indicative of future performance. Investments are subject to risks, including, but not limited to, possible delays in payments and loss of income or capital invested. These opinions are subject to change without notice and do not constitute investment advice or recommendation. The Lonsec Ratings (assigned as follows: Legg Mason Martin Currie Equity Income Trust October 2016; Legg Mason Martin Currie Real Income Fund June 2016; Legg Mason Martin Currie Small Companies Trust February 2016; Legg Mason Martin Currie Diversified Income Trust - May 2016; Legg Mason Western Asset Australian Bond Trust May 2016; Legg Mason Diversified Growth Trust April 2016; Legg Mason Brandywine Global Opportunistic Fixed Income Trust - September 2016) presented in this document are published by Lonsec Research Pty Ltd ABN AFSL The Ratings are limited to General Advice (as defined in the Corporations Act 2001 (Cth)) and based solely on consideration of the investment merits of the financial products. Past performance information is for illustrative purposes only and is not indicative of future performance. They are not a recommendation to purchase, sell or hold Legg Mason Asset Management Australia Limited products, and you should seek independent financial advice before investing in these products. The Ratings are subject to change without notice and Lonsec assumes no obligation to update the relevant documents following publication. Lonsec receives a fee from the Fund Manager for researching the products using comprehensive and objective criteria. For further information regarding Lonsec s Ratings methodology, please refer to our website at: The Zenith Investment Partners ( Zenith ) Australian Financial Services License No rating (Legg Mason Martin Currie Equity Income Trust assigned June 2016; Legg Mason Martin Currie Real Income Fund assigned June 2016, Legg Mason Western Asset Australian Bond Trust assigned June 2016, Legg Mason Brandywine Global Opportunistic Fixed Income Trust assigned March 2016) referred to in this document is limited to General Advice (s766b Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual and is subject to change at any time without prior notice. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Past performance is not an indication of future performance. Zenith usually charges the product issuer, fund manager or related party to conduct Product Assessments. Full details regarding Zenith s methodology, ratings definitions and regulatory compliance are available on our Product Assessments and at The Professional Planner Zenith Fund Awards are determined using proprietary methodologies Fund Awards were issued October Legg Mason / Brandywine was named Global and Diversified Fixed Interest Fund Manager at the 2016 Fund Awards, issued on October 7, 2016 and are solely statements of opinion and do not represent recommendations to purchase, hold, or sell any securities or make any other investment decisions. Fund Awards are current for 12 months from the date awarded and are subject to change at any time. Fund Awards for previous years are referenced for historical purposes only. 12