- New funds designed to meet investor needs for diversified core holdings and income
- The firm plans to launch additional ETF products in the coming months
Legg Mason announced that it has launched four new outcome-oriented index-based ETF funds in partnership with its investment affiliate QS Investors. The four funds are branded under the Legg Mason name and began trading on the Nasdaq Stock Market on December 29, 2015.
Increasing concerns about macroeconomic risks, equity volatility and the continuing search for stable income are pressuring investors to look beyond traditional market cap weighted indices.
“We are excited to partner with Legg Mason to bring an investment approach we developed for institutions over a decade ago to retail investors in an ETF fund format. Many investors think of ETFs only as market cap indexed vehicles, but our macro diversification and sustainable income approaches target specific investment outcomes in a cost-effective format. This launch is part of our long-term focus on innovating to serve investor needs and create better solutions,” said James Norman, President of QS Investors.
Three of the new funds take a macro approach to building portfolios and balancing risk to deliver broad market exposure that can complement core portfolios. Based upon QS Investors’ proprietary rules-based methodology, Diversification Based Investing (DBI), the new funds are predicated on the understanding that capitalization-weighted indices are not balanced across opportunities and risks in the market place. Better diversification across macro exposures, like geography and economic sector can improve risk/return characteristics and mitigate unintended bets and therefore potentially lower drawdowns during macro-economic events. The funds are:
- Legg Mason Developed Ex-US Diversified Core ETF
- Legg Mason Emerging Markets Diversified Core ETF
- Legg Mason US Diversified Core ETF
Legg Mason is launching a fourth fund, the Legg Mason Low Volatility High Dividend ETF, focused on income, risk mitigation and capital appreciation. It is based upon the idea that a stock’s ability to sustain a strong dividend payout is often associated with lower volatility, making these two characteristics complementary. Using a disciplined, rules-based methodology, the fund will screen for stocks with the potential for sustainable high dividends, while simultaneously screening out historically volatile stocks in the market.
“There are compelling opportunities to help investors achieve their objectives, whether capital preservation, income, or growth in an ETF format as the market grows and the ETF vehicle evolves. These innovative, outcome-oriented products have the potential to serve the needs of investors looking to better diversify across risks in their portfolios. We are excited to begin building our ETF offering and will continue to identify ways in which we can capitalize on the investment strengths of the Legg Mason investment affiliates,” said Rick Genoni, Head of the ETF business at Legg Mason.
The firm plans to launch additional ETF products in the coming months.