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Legg Mason to double EMD threshold in star trio’s bond fund

Legg Mason to double EMD threshold in star trio’s bond fund

Legg Mason is seeking approval to increase the amount of emerging market debt in its $1.2 billion global bond fund overseen by three Citywire AA-rated managers.

The firm wants to up the threshold of developing world bonds to 20% in the Legg Mason Brandywine Global Fixed Income fund.

The US asset manager has written to shareholders about the proposal, which would be dependent on potential investment destinations meeting certain investment grade criteria.

Under the new guidelines, 20% of the fund’s net asset value could be invested in countries that have local currency denominated long-term debt rated below A- by S&P or equivalent ratings agencies.

This is as well as being able to invest countries that are not represented in the Citigroup World Government Bond index.

The fund, which is co-managed by David Hoffman, Jack McIntyre and Stephen Smith, would continue to primarily focus on investment grade debt.

Other changes being put to investors would include reducing the average weighted duration from between two years and 10 years, to between one year and 10 years.

Its main areas of investment at the end of May 2014 were in the US (20.1%), the UK (11.4%) and Australia (10.8%). The largest single position was an Italian government bond, which made up 7.3% of the fund, according to the latest factsheet.

The Legg Mason Brandywine Global Fixed Income fund has returned 12.3% over the three years to the end of May 2014. This compares with a return of 6.84% by the average manager in the Bonds – Global sector over the same period.

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