At Legg Mason, our proven income solutions across a full suite of equity, fixed income and multi-asset funds are purposefully designed to meet your clients' future needs. With our range of investment affiliates providing in-depth expertise, we enable you to actively respond to changes in plans or circumstances.
We enable you to actively respond to changes in plans or circumstances
We are now in a world where interest rates are at record lows and the reality is that they are likely to remain so for some time to come.
To earn the same dollars of income from Term Deposits today requires an investment of up to four times as much as it did in 2008.
In 2010, one of Australia's leading banks offered its customers a 5 year Term Deposit rate of 8%. Today that same bank is offering less than 3% on a 5 year Term Deposit rate. This means that investors in income products are looking for income streams that will allow them to maintain their living standards.
With a relatively fixed capital base, inflation protection should be a central consideration in any retiree's medium to long-term financial plan. Over the past 20 years, income needed to grow a total of 63% to offset the loss of purchasing power from inflation.
As every year passes Australians are living longer and this trend is forecast to continue. As we live longer there is growing risk that we outlive our savings – this is known as longevity risk. By 2025, a man aged 60 can expect to live another 27.9 years and a woman 30.3 years.
Sticking to the well-worn path of Term Deposits and annuities will not provide for the comfortable lifestyle that income investors seek. It is time for income investors to ‘rethink’ their approach to investing. This means turning some of the traditional portfolio construction approaches on their heads.
Many commentators still, incorrectly, view Australia as a resources dominated market. The reality, however, is very different.
While conventional portfolio construction wisdom dictates that to achieve a higher return we need to take more risk, that is not the case when the objective is to generate a sustainable and growing income stream.
When the investment objective is primarily focused on sustainable income generation, we believe your money should be managed differently compared with a typical equity strategy.
Australian payout ratios over the past 15 years have averaged over 60%, which is well above other developed economies.
According to the International Monetary Fund (IMF), when the debt of a nation exceeds 60% of its annual production (GDP) then economic growth is no longer sustainable and future growth is compromised. Australia is the only AAA rated country to exhibit a high expected divided yield and have very low debt to GDP.
Assets such as property, infrastructure and utilities provide a tangible investment linked to the real economy, where income can grow ahead of inflation, minimising income risk. For the income investor, listed real assets are the missing link between equities and fixed income.
By investing real assets investors can hedge against future price rises to a significant degree. For example: since 1983, retail sales have grown by 2.5% p.a. above the inflation rate of 3.6% p.a.
One of the key drivers of real asset growth is population growth. Australia is projected to experience a 50.6% population growth between now and 2050. The largely monopolistic nature of infrastructure assets allows them to benefit directly from population growth, as more people use these fixed assets.
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Legg Mason Asset Management Australia Ltd (ABN 76 004 835 849 AFSL 240827) is part of the global Legg Mason Inc. group. Any reference to Legg Mason or Martin Currie Australia is a reference to Legg Mason Asset Management Australia Limited. Martin Currie Australia is a division within Legg Mason. Legg Mason is the Responsible Entity of the Legg Mason Martin Currie Real Income Fund (ARSN 146 910 349)( Fund), Legg Mason Martin Currie Equity Income Fund (ARSN 150 751 821) (Fund), Legg Mason Martin Currie Diversified Income Fund (ARSN 169 461 116) (Fund). Martin Currie Australia is the investment manager of the Fund and Funds. Any reference to 'Brandywine' is a reference to Brandywine Global. Brandywine Global is the investment manager of the Legg Mason Brandywine Global Income Optimiser Fund (ARSN 618 213 488). Any reference to 'Brandywine' is a reference to Brandywine Global. Brandywine Global is the investment manager of the Legg Mason Brandywine Global Income Optimiser Fund (ARSN 618 213 488). Before making an investment decision you should read the Product Disclosure Statement (PDS) for the relevant Fund or Fund carefully. The PDS is available and can be obtained by contacting Legg Mason on 1800 679 541 or at
. This 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 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.
The Lonsec Ratings (assigned as follows: Legg Mason Martin Currie Real Income Fund - April 2017; Legg Mason Martin Currie Equity Income Fund – October 2017; Legg Mason Martin Currie Diversified Income Fund – December 2016) presented in this document are published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL421445. The Ratings are limited to “General Advice” (as defined in the Corporations Act 2001 (Cth)) and based solely on consideration of the investment merits of the financial products. Past performance information is for illustrative purposes only and is not indicative of future performance. They are not a recommendation to purchase, sell or hold Legg Mason Asset Management Australia Limited products, and you should seek independent financial advice before investing in these products. The Ratings are subject to change without notice and Lonsec assumes no obligation to update the relevant documents following publication. Lonsec receives a fee from the Fund Manager for researching the products 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 Martin Currie Real Income Fund assigned June 2017; Legg Mason Martin Currie Equity Income Fund assigned June 2017; Legg Mason Martin Currie Diversified Income Fund assigned October 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's methodology, ratings definitions and regulatory compliance are available on our Product Assessments and at http://www.zenithpartners.com.au/RegulatoryGuidelines.
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Legg Mason Martin Currie Equity Income Fund and Legg Mason Martin Currie Diversified Income Fund received a 5-star Morningstar Rating™ as at 30 September 2017.