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 over the past 3 years and the Fund is ranked in the first quartile over 1 & 5 years in its peer group3.
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.
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. Throughout 2017 the Fund delivered strong outperformance, particularly due to gains attributed to currency allocations that reflect a significant underweight in the dollar and an overweight in emerging markets and other markets outside the G3.
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.
Last year, we bet on what was not evident, and few believed. This year, all the evidence continues to point to the world pulling away from secular stagnation and towards a self-sustaining business cycle expansion, again something that few seem to believe. We are reminded daily of a litany of risks. Yet the primary response to these risks has been for policymakers to boost capital’s incentive to grow in the presence of persistently accommodative monetary policy around the world. If this year’s negotiations to re-establish a new world order in trade turn out to be more posturing than policy, then we should see a strong self-sustaining global economic advance associated with a flat-to-weaker U.S. dollar, mildly rising rates in the developed world, and flat- to-falling rates in the emerging world.
Applying our price and information risks versus opportunities process inevitably brings us to Mexico and the question of how we are managing the uncertainty fostered by the U.S. administration’s upcoming decision on whether to withdraw from NAFTA. Markets hate uncertainty, and it is true that there is much to worry about in Mexico. But the extreme depression in the currency strongly suggests to us that much of this is already priced in and that a resolution of the uncertainty, one way or another, will be constructive for the currency.
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.
Phone: +61 (3) 9017 8644
Mobile:+61 448 277 060
Phone: +61 (3) 9017 8650
Mobile:+61 422 125 726
Phone: +61 (2) 8211 2760
Mobile:+61 438 076 500
Phone: +61 (2) 8211 2759
Mobile:+61 401 625 388
ADVISER & CLIENT SERVICES
|General Enquiries:||Phone:1800 679 541
|Melbourne Office:||Level 47, 120 Collins Street|
Melbourne VIC 3000
PO Box 24011
Melbourne VIC 3001
|Sydney Office||Level 25, 88 Phillip Street
Sydney NSW 2000
Past performance is not a guide to future returns.
All funds issued by Legg Mason Asset Management Australia Ltd, (“Legg Mason”) (ABN 76 004 835 849 AFSL 240827). Brandywine Global Investment Management, LLC (“Brandywine Global”) is a division within Legg Mason. Brandywine Global is the fund manager of the fund. Before making an investment decision you should read the Product Disclosure Statements (“PDS") for the Legg Mason Brandywine Global Opportunistic Fixed Income Fund (ARSN 127 583 411) carefully and you need to consider, with or without too assistance of a financial advisor, whether such an investment is appropriate in light of your particular investment needs, objectives and financial circumstances. The PDS can be obtained at www.leggmason.com.au or on 1800 679 541. The product 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 ae subject to risks, including, but not limited to, possible delays in payments and loss of income or capital invested.
1 The Lonsec Rating (assigned October 2017) 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 2017) 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.
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.
3 Source: Morningstar Direct. Ranked in the first quartile in its peer group among 67 funds within Morningstar Bonds Global category as at 31 December 2017.
© 2017 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. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 (“ASXO”).
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.
Legg Mason Brandywine Global Opportunistic Fixed Income Fund received a 4-star Morningstar RatingTM as at 31 December 2017.
The Morningstar Analyst Rating™ for Legg Mason Brandywine Global Opportunistic Fixed Income strategy is 'Silver' as at 27 January 2017.