Legg Mason Inc has launched four new outcome-oriented index-based exchange traded 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 29 December, 2015.
The new funds are: The funds are: the Legg Mason Developed ex-US Diversified Core ETF (DDBI); the Legg Mason Emerging Markets Diversified Core ETF (EDBI); the Legg Mason US Diversified Core ETF UDBI); and the Legg Mason Low Volatility High Dividend ETF (LVHD).
"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,” says James Norman, President of QS Investors. “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,"
Three of the new funds – DDBI, EDBI, and UDBI – 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 capitalisation-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.
LVHD, meanwhile, is 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.
eve 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 capitalise on the investment strengths of the Legg Mason investment affiliates," says Rick Genoni, Head of the ETF business at Legg Mason.
