The Legg Mason Brandywine Global Opportunistic Fixed Income Fund is return seeking, high conviction strategy with a 'go anywhere', opportunistic style and strict risk limits in place to avoid over exposure to any one region or issuer. "Highly Recommended" by Lonsec1 and Zenith2 .
Below, Portfolio Manager, Anujeet Sareen gives an overview of the Fund over the past 12 months and describes how the Fund combines currency and bond strategies to maximise the return potential.
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The Legg Mason Brandywine Global Opportunistic Fixed Income Fund's success stems from its practical and proven investment philosophy and process, which focuses on global bond investments offering the best combination of high real yields, undervalued currencies, and attractive fundamentals given the firm's macroeconomic outlook.
This top-down, value-based approach maintains a primary focus on sovereign debt with a goal of unlocking the potential performance benefits of mean-reversion tendencies in interest rates and currency valuations.
The Fund's macro-informed perspective, which guides country and currency decisions and results in a benchmark-agnostic approach, is the key differentiator. Active duration and currency management, along with high conviction in the team's investment ideas also contribute significantly to the Fund's success.
Lastly, the Fund relies on an experienced team dedicated to investing only where they believe the greatest opportunities exist versus covering dedicated countries or sectors. This combination of extensive experience and a flexible research structure provides the Fund with a focused, cohesive, and agile investment process.
The Fund's top-down, value-oriented approach combines a deep understanding of the prevailing macroeconomic conditions with a variety of valuation metrics. Furthermore, this approach is benchmark-agnostic, as the investment team eschews index-relative allocations to instead look for the highest real-yielding countries and the most undervalued currencies globally.
Fundamental factors, such as the economic cycle, inflation, external imbalances, capital and trade flows, policy considerations, and environmental, social, and governance factors are also analysed to determine whether pricing anomalies in asset markets have led or may lead to the kind of economic and policy conditions which provoke mean reversion tendencies in both interest rates and currencies.
Heading into the final quarter of the year, the Fund largely retains its overall structure: underweight global duration but with duration concentrated mainly in select emerging markets. The Fund is aligned with our thesis of peak macro divergence. A constructive unwinding of this divergence would imply a macro upswing in investment performance. It would begin with stabilisation in the dollar and a shift toward risk assets in emerging markets to capture the stabilisation in the global economy and uptrend in global trade. This sequence of events would be particularly beneficial to the portfolio since real rate spreads with EM bond markets are often reflective of solvency risk. A better global growth story diminishes this risk and should reduce the spread between the low or negative real yields in the developing markets and positive real yields in EM.
Notwithstanding our generally optimistic view on global growth and its underlying component trends, volatility is likely to continue this year and possibly early into next year. The Fed is expected to tighten until an event or market reaction sends the message to pause. Likewise, the escalation of the tariff war with China will continue until an event reduces this tension or the market reaction to the threat of tariffs sends a signal to the administration to ease up on the pressure. Overall, however, our approach and positioning reflect our views that the information risk of a global trade war is well incorporated into the valuations of emerging market bonds and currencies.
Brandywine Global offers a broad array of fixed income, equity, alternatives, and asset allocation strategies that seek value across global markets. Founded in 1986 the firm has been a wholly owned, independently operating affiliate of Legg Mason, Inc. since 1998. The firm's headquarters is in Philadelphia and has office locations in San Francisco, Montreal, Toronto, Singapore, and London. Brandywine Global believes in the power of value investing. Acting with conviction and discipline, the firm looks beyond short-term, conventional thinking to deliver long-term value to clients across a broad range of global fixed income and equity strategies.
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Past performance is not a guide to future returns.
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 Brandywine Global as the fund manager for the Legg Mason Brandywine Global Opportunistic Fixed Income Fund (ARSN 127 583 411). 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.
1 The Lonsec Rating (assigned October 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
2 The Zenith Investment Partners ("Zenith") Australian Financial Services (License No. 226872 rating (Legg Mason Brandywine Global Opportunistic Fixed Income Fund assigned March 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™ methodology, ratings definitions and regulatory compliance are available on our Product Assessments and at http://www.zenithpartners.com.au/RegulatoryGuidelines.
© 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.
The Professional Planner | Zenith Fund Awards are determined using proprietary methodologies. Fund Awards were issued October 6, 2017 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.
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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 Brandywine Global Opportunistic Fixed Income Fund received an overall rating of 3 stars out of 71 Bonds - Global funds as of 30 September 2018. The Morningstar Analyst Rating™ for Legg Mason Brandywine Global Opportunistic Fixed Income strategy is 'Silver' as at 30 May 2017.