Western Asset, a subsidiary of Legg Mason has launched two flexible fixed income funds that aim to provide returns from bonds in the current low rate environment. The two funds, the Multi-Asset Credit fund and the Global Total Return Investment Grade Bond fund, will provide investors with a flexible approach to bond investing.
Managed by Christopher Orndorff, the Multi-Asset Credit fund aims to target a portfolio of global high income securities in order to provide attractive returns. The fund already has £100m in assets and was launched on 31 December. Mr Orndorff aims to use hedging strategies in order to protect investors in the event of a credit market sell-off.
The Global Total Return Investment Grade Bond fund is managed by London-based Gordon Brown and Andrew Cormack, and aims to maximise total return with volatility expected to remain below 6 per cent.
The fund is expected to invest in investment-grade bonds and currencies in both developed and emerging markets. It will seek to have exposure to foreign currencies, with up to 25 per cent in unhedged non-US dollar assets or currencies. The fund will also use derivatives whenever appropriate in order maximise returns and manage currency risks.
Both the funds are Dublin-domiciled with a minimum initial investment of $1,000 (£699).
Comment:
In this current low interest rate environment, investors often find themselves restricted when looking for lucrative returns. These funds from Legg Mason seek to maximise total returns by investing in flexible fixed income.
With an entry charge of 5 per cent, and an ongoing charge of 1.5 per cent, both funds have been classed as four on the risk and reward profile on its Kiid. Both funds will be subject to fluctuations in value due to their diversified portfolio of higher rated bonds from various countries and sectors and the use of derivatives.
However, the funds are subject to risks similar to any fixed income investment. A higher bond exposure can mean there is a risk that issuers of bonds held by the fund may not be able to repay the investment or the interest due on it, leading to losses. Other risks can include liquidity, low rated bonds, a change in interest rates, and volatility in emerging markets.
• Multi-Asset Credit fund targets high income securities
• Global Total Return fund targets investment-grade bonds and currencies
• Entry charge of 5 per cent and ongoing charge of 1.5 per cent for both funds
• Minimum initial investment $1,000 (£699)
