The assets of the Legg Mason Cash Plus Trust are managed on a sub-advisory basis by Western Asset Management Company Pty Ltd ("Western Asset"), a subsidiary of Legg Mason, Inc. and an affiliate of Legg Mason Australia.
The cash plus investment process is diversified, research driven, highly disciplined and is enhanced through the use of quantitative tools that are used to add value and control risk. The key portfolio construction strategies employed that seek to add value are duration management and yield enhancement:
- duration management is based on fundamental economic analysis, expectations for monetary policy, yield curve shape from cash securities out to 10 year bonds, stock selection and implied forward curves;
- yield enhancement is achieved by strategically investing in securities (or sectors) that offer attractive risk/return characteristics, and by selecting the best performing securities within those sectors.
The outcome of the process is a portfolio comprised of securities expected to outperform their peers across sectors and yield curve positions. Portfolio positions also seek to maximise the information in our forecast of monetary policy and the direction of interest rates.