The assets of the Legg Mason Global Multi Sector Bond Trust are managed on a sub-advisory basis by Western Asset Management Company Limited, a subsidiary of Legg Mason, Inc. and an affiliate of Legg Mason Australia.
Western Asset aims to add value by exploiting inefficiencies in fixed income markets. A fundamental approach is used to identify these inefficiencies. The philosophy is implemented through uniform application of the following strategic points:
- Long Term Value Investing - seeks long-term value by actively rotating between different fixed income sectors, including emerging market and high yield debt; and
- Multiple Strategies - employs multiple investment strategies with the objective of managing the impact of directional changes associated with a single sector or market event.
The process assimilates top-down macro-economic views with bottom-up credit analysts' fundamental and relative value views regarding industry and issuer opportunities.
The global multi sector bond strategy rotates allocations globally to high-yield and investment-grade corporate securities, mortgage and asset-backed securities, emerging market securities and global government bonds. The key areas in adding value are:
- Sector Allocation: seeks to enhance returns by applying fundamental and sector-specific research to identifying those sectors that are seen to have the best relative value, total return potential and risk diversification characteristics.
- Sub-Sector / Issue Selection: seeks to identify international geographic and industry sub-sectors, credit quality tiers, issuers and security types that are deemed undervalued and are likely to benefit from the macroeconomic and fundamental outlook. Issue selection is implemented on an opportunistic basis as attractive trading opportunities occur.
Duration / Yield Curve: treated primarily as a risk control tool, especially during periods of high risk in emerging and high yield corporate bond markets.
- Currency: governed by the impact of currency hedging costs on expected returns and the underlying volatilities of non-U.S. currencies versus the U.S. dollar.