The Legg Mason Western Asset Australian Bond Fund is designed to maximise the investment opportunities from Australian fixed income as well as promote the defensive attributes that this asset class offers. The Fund is managed by the Legg Mason wholly owned affiliate Western Asset which is one of the world's largest fixed income specialists.
Western Asset has won the Professional Planner / Zenith Award for three consecutive years, reinforcing their Australian Fixed Income expertise. This gives Western Asset a clean sweep of the top three Australian Fixed Income awards.
Below, Portfolio Manager, Anthony Kirkham details why this Fund has been particularly successful and the process the team employs to deliver results.
Head of Investment Management Australia and NZ, Western Asset
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The Fund benefits from both Western Asset’s global scale and our local expertise. Over the Fund's long history, we have provided attractive risk adjusted returns for investors, outperforming the benchmark with lower risk. I believe that this is a result of our highly experienced, stable and globally integrated investment team, who adheres to a consistent investment philosophy that has been developed over the past 45 years.
This genuinely team based approach leverages the significant breadth of the firm’s resources to make balanced and well-informed investment decisions. We utilise our best ideas within an integrated risk management approach to build a portfolio that is designed to meet the long-term objectives of our clients.
Philosophically, we believe that securities have an intrinsic value which markets often misprice, providing investment opportunities. Through disciplined and rigorous analysis by our macroeconomic and credit research teams, we aim to systematically identify and then capitalise on such opportunities.
That said, it is our disciplined and risk controlled focus on diversification that has been the major difference. By holding diversified positions and sizing them appropriately, we ensure that no single factor can swamp our ability to outperform our benchmark.
Using our global research teams to assist with our credit decision process also sets us apart from many other managers, particularly with such a large proportion of local bonds issued by international companies. As this continues to grow, we expect this as a source of increasing value add for our portfolio. Having on-the-ground research teams covering international issuers at their home base allows for greater insight into their credit worthiness and resulting value offered by these securities.
Finally, active sector rotation, particularly in liquid sectors recognising the different valuation opportunities across the yield curve, has also been an important contributor to our outperformance.
Our investment process combines both top-down and bottom-up assessments of value:
The RBA maintains a position of patience with inflation as well as with any future movement in the cash rate. The out-of-cycle rise in home lending rates by a growing number of banks only works to consolidate the view that rates will remain on hold for some time to come. Our base case remains for the RBA to keep rates on hold at 1.5% until at least the second half of 2019.
We continue to take a tactical approach to interest rate strategies to exploit market variations from our base case whilst maintaining an overall bias to underweight duration. We maintain yield curve-steepening positions in the 3- to 10-year tenors for our clients' portfolios. We also maintain a mild flattening position in the 30-year versus the 10-year tenor as a ballast to our overweight credit position and as long-dated Australian bonds continue to stand out relative to other developed markets.
Legg Mason affiliate, Western Asset Management is one of the world's leading fixed income managers. Established in 1971, from offices in Pasadena, Hong Kong, London, Melbourne, New York, São Paulo, Singapore, Tokyo and Dubai, the company provides investment services for a wide variety of global clients, across an equally wide variety of mandates. Western Asset's long performance track record and global presence have positioned the company to continue its commitment to excellence in fixed-income investment management and client service. With a focus on long-term fundamental value investing that employs a top-down and bottom-up approach, the firm has nine offices around the globe and deep experience across the range of fixed income sectors.
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* Source: Morningstar Direct. Legg Mason Western Asset Australian Bond ranked in the first quartile in its peer group among 90 funds over 1 year, 83 funds over 3 years and 71 funds over 5 years within Morningstar Bonds Australia category as at 30 September 2018.
Issued by Legg Mason Asset Management Australia Limited (ABN 76 004 835 849, AFSL 240827) (Legg Mason Australia ) which is part of the Legg Mason Inc. group. Legg Mason Australia as Responsible Entity has appointed Western Asset as the investment manager of the Legg Mason Western Asset Australian Bond Fund (ARSN 088 670 286). Before making an investment decision you should read the Product Disclosure Statement (PDS) for the relevant Fund or Fund carefully. The PDSs are available and can be obtained by contacting Legg Mason on 1800 679 541 or atwww.leggmason.com.au . This document has not been prepared to take into account the investment objectives, financial objectives or particular needs of any particular person. Neither Legg Mason, 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. Before making an investment decision you should read the Product Disclosure Statement 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 Lonsec Rating (assigned as Legg Mason Western Asset Australian Bond Fund - April 2018) presented in this document is published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445. The Rating is limited to "General Advice" (as defined in the Corporations Act 2001 (Cth)) and based solely on consideration of the investment merits of the financial product(s). Past performance information is for illustrative purposes only and is not indicative of future performance. It is not a recommendation to purchase, sell or hold Legg Mason Asset Management product(s), and you should seek independent financial advice before investing in this product(s). The Rating is subject to change without notice and Lonsec assumes no obligation to update the relevant document(s) following publication. Lonsec receives a fee from the Fund Manager for researching the product(s) using comprehensive and objective criteria. For further information regarding Lonsec's Ratings methodology, please refer to our website at:http://www.lonsecresearch.com.au/research-solutions/our-ratings. The Zenith Investment Partners ("Zenith") Australian Financial Services License No. 226872 rating (Legg Mason Western Asset Australian Bond Fund assigned May 2018) 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 http://www.zenithpartners.com.au/RegulatoryGuidelines.
© 2018 Morningstar Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a professional financial adviser.
The Morningstar Rating is an assessment of a fund's past performance – based on both return and risk – which shows how similar investments compare with their competitors. A high rating alone is insufficient basis for an investment decision. The Legg Mason Western Asset Australian Bond Fund received an overall rating of 5 stars out of 99 Bonds – Australia funds as of 30 September 2018.
The Morningstar Analyst Rating™ for Legg Mason Western Asset Australian Bond strategy is 'Silver' as at 2 October 2017.
Morningstar Awards 2018 (c). Morningstar, Inc. All Rights Reserved. Awarded to Legg Mason Western Asset for Morningstar Fund Manager of the Year, Fixed Income Category, Australia. The Professional Planner | Zenith Fund Awards are determined using proprietary methodologies. Fund Awards were issued October 5, 2018 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.
© 2018 FE Money Management. all rights reserved. The information, data, analyses, and opinions contained herein (1) include the proprietary information of FE Money Management and Lonsec (2) may not be copied or redistributed (3) do not constitute investment advice offered by FE Money Management or Lonsec (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a security (5) are not warranted to be correct, complete, or accurate. FE Money Management and Lonsec shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses, or opinions or their use. FE Money Management and Lonsec does not guarantee that a fund will perform in line with its Fund Manager of the Year award as it reflects past performance only. Likewise, the Fund Manager of the Year award should not be any sort of guarantee or assessment of the creditworthiness of a fund or of its underlying securities and should not be used as the sole basis for making any investment decision.