Legg Mason has added Western Asset Global Multi Strategy Fund to its global funds range in Singapore. The fund is a total return bond fund with a medium-term investment horizon.
Sub-managed by Western Asset Management, the fund seeks to maximise total return through income and capital appreciation through investment-grade debt securities denominated in US dollars, Japanese yen, pound sterling, euro and currencies of a variety of other developed and emerging market countries. Western Asset is part of Legg Mason and is one of the world's largest fixed-income mangers, with more than $470 billion under management worldwide.
The fund would work for investors who are looking to benefit from high yields without having to assume equity-like volatility, says Lennie Lim, Singapore-based head of Asia distribution for Legg Mason.
"Global fixed-income markets have become broader and deeper over the last decade and now offer a wider range of investment opportunities than ever before. This means that there is no longer a need to restrict your investments to just government or corporate bonds," says Mike Zelouf, London-based director of international business at Western Asset.
The fund targets the global bond universe and has the flexibility to invest across a broad range of bonds, from safer developed market government bonds to riskier high-yield corporate and emerging-market bonds.
"By holding a diversified portfolio that has the scope to participate in a wider set of fixed income sectors, investors can take advantage of the changing market conditions and better protect their assets in varying economic scenarios," says Zelouf.
Western Asset believes that the government programmes that have been put in place to combat the impact of the global financial crisis will continue to benefit bond prices, even if the economic backdrop remains challenged. Yields across corporate bonds, emerging-market and high-yield debt are at historical high levels, and Western Asset expects this to provide many opportunities for the fund.
"Under our base case scenario, both investment grade and high-yield corporate debt should perform strongly," Zelouf says.
On the flipside, advocates of investing in equities for the long-term note that investing in bonds might disappoint when stock markets finally rally and that bonds are not risk-free because of the potential for defaults.
Western Asset responds to those points by saying that default risks have been overestimated. The fund house expects corporate bonds to outperform their government counterparts over the next few years. Within the corporate bond sector, the fund house favours emerging-market bond issues that it believes are priced attractively relative to similar corporations in the developed world.
The fund is benchmarked against the Barclays Capital Global Aggregate Index (50%), Barclays Capital US Corporate High Yield - 2% Issuer Capped Index (25%) and the JPMorgan EMBI+ Index (25%). As of end-March, the fund was mainly invested in bond issues in the US (55%) and in cash (14%). The rest of the fund was invested in Brazil, Germany, Russia, Turkey, France, Ireland, the UK, the Netherlands, and Mexico. Around 33% of the fund is invested in triple-A rated bonds. Around 26% of the fund is in high-yield debt. The fund has a sales charge of up to 5% and an annual management fee of up to 1.1%.