The Legg Mason Global Infrastructure ETF (INFR) seeks to track the investment results of an index composed of infrastructure-related equity securities from global markets constructed through the application of several fundamental factors.
INFR may benefit investors seeking a complement to existing core portfolios, with the potential to deliver diversification, defensive equity growth and inflation-sensitive returns.
The RARE Global Infrastructure Index (the "Underlying Index") uses proprietary methodology that includes:
- Infrastructure Filter: The MSCI ACWI All Cap Index is filtered to include companies within 13 GICS infrastructure sub-industries.
- Liquidity Filter: Companies are screened for a minimum of $500M market capitalization and 1-year average daily value traded of $2M.
- RARE Exposure Score: Leverages publicly available financial data to score exposure to infrastructure and utilities — including only companies that meet RARE's criteria for infrastructure exposure, quality and focus.
- Dividend Yield & Cash Flow Yield Rank: Companies are ranked from highest to lowest dividend yield and cash flow yield. Lower-yielding companies are removed, and highest cash flow companies are added back after being screened for dividends.
- Index Weighting: Weighting determined quarterly by market capitalization and free float (shares publicly available for trading), RARE exposure score, price volatility and region. On a quarterly basis, leading economic indicators are used to establish weight between economically sensitive sectors and more regulated/defensive sectors. Exposure caps and minimums are put in place.
The Underlying Index's securities are reconstituted quarterly and rebalanced quarterly.
meet your managers
RARE is a specialized investment manager focused exclusively on global listed infrastructure. Established in 2006, RARE offers expertise across the infrastructure spectrum and aims to identify and invest in high-quality listed infrastructure assets with the goal of delivering strong absolute returns over an investment cycle.
Charles Hamieh is a member of RARE's Investment Leadership Team, and is responsible for the day-to-day management of the RARE Global Infrastructure ETF. This includes oversight of the portfolio structure and the Fund's investments, and compliance with its investment objective, guidelines and restrictions.
Legg Mason's unique structure provides you with access to this specialized expertise, offering a powerful portfolio of solutions through our independent investment management firms.
Senior Portfolio Manager
RARE Global Infrastructure Index (the underlying index) is constructed from global infrastructure-related equity securities. The Underlying Index utilizes a proprietary methodology created and sponsored by RARE Infrastructure (North America) Pty Limited ("RARE"), the fund's subadviser. RARE is affiliated with both LMPFA and the fund. The fund will invest at least 80% of its net assets, plus depositary receipts representing securities in the Underlying Index. The Underlying Index is composed of equity securities in developed and developing markets that are included in the MSCI ACWI All Cap Index. Companies in the MSCI ACWI All Cap Index are screened to include only companies within the following Global Industry Classification Standard (GICS) sub-industries and are classified into infrastructure sectors as follows:
Electric Utilities, Gas Utilities, Independent Power Producers & Energy, Multi-Utilities Traders, Renewable Electricity, Water Utilities Railroads, Airport Services, Cable & Satellite, Highways & Railtracks, Marine Ports & Services, Oil & Gas Storage & Transportation, Highways & Railtracks, Marine Ports & Services, Oil & Gas Storage & Transportation, Railroads, and Specialized Real Estate Investment Trusts ("REITs").
The Underlying Index applies multiple screens to select securities that provide investors with exposure to securities that most closely match RARE's definition of infrastructure. Factors used to select the securities include: Market capitalization and average daily volume, forward looking dividend yields, and operating cash flow yield. The subadviser believes that companies that score high on the screens applied by the Underlying Index should be considered high quality companies. The infrastructure exposure score is calculated using revenue, earnings, earnings before interest, tax, depreciation and amortization, and similar measures to include only those companies that have more than a 60% exposure to infrastructure. Each company within the Underlying Index is given a weight based on its market capitalization adjusted by its infrastructure exposure and security price volatility. The weight of each sector in the Underlying Index will range from 40% to 60% and will be adjusted quarterly based on movements in the OECD G7 Leading Indicators Index, which attempts to identify trends in the economic cycle. RARE anticipates that the number of component securities in the Underlying Index will range from 75 to 200. Companies in the Underlying Index are assigned to four regions: Asia Pacific, Emerging Markets, Europe and North America, with no region exceeding 50% of the Underlying Index. A company is assigned to a region based on its listing domicile. A company's regional economic exposure may be different from its listing domicile. Companies in the Underlying Index are currently from approximately 23 countries, including Australia, Belgium, Brazil, Canada, Chile, Finland, France, Germany, Hong Kong, Italy, Japan, Malaysia, Mexico, Netherlands, New Zealand, Portugal, Qatar, Singapore, South Korea, Spain, Switzerland, United Kingdom and United States. The countries represented by companies in the Underlying Index may change from time to time due to market conditions. As initially constituted and balanced, no individual security in the Underlying Index will exceed 5%, and no individual security may have a weight of less than 0.10%. The Underlying Index's securities are reconstituted quarterly and rebalanced quarterly. The Underlying Index is reconstituted on different dates from the MSCI ACWI All Cap Index. The fund's securities portfolio is rebalanced when the Underlying Index is rebalanced or reconstituted. The composition of the Underlying Index and the fund after reconstitution and rebalancing may fluctuate and exceed the above Underlying Index limitations due to market movements and other factors. The components of the Underlying Index, and the degree to which these components represent certain sectors and industries, may change over time.
What I Should Know
The Fund is newly organized, with a limited history of operations. Equity securities are subject to price fluctuation and possible loss of principal. Companies in the infrastructure industry may be subject to a variety of factors that could adversely affect their business or operations, including high interest costs in connection with capital construction programs, high degrees of leverage, costs associated with governmental, environmental and other regulations, the effects of economic slowdowns, increased competition from other providers of services, uncertainties concerning costs, the level of government spending on infrastructure projects, and other factors. International investments are subject to special risks including currency fluctuations, social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets. In rising markets, the value of large-cap stocks may not rise as much as smaller-cap stocks. Small- and mid-cap stocks involve greater risks and volatility than large-cap stocks. The Fund may focus its investments in certain industries, increasing its vulnerability to market volatility. There is no guarantee that the Fund will achieve a high degree of correlation to the index it seeks to track. The Fund does not seek to outperform the index it tracks, and does not seek temporary defensive positions when markets decline or appear overvalued. Derivatives, such as options and futures, can be illiquid, may disproportionately increase losses and have a potentially large impact on Fund performance.
Performance shown represents past performance and is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate so shares, when redeemed, may be worth more or less than the original cost. Market price returns are typically based upon the mid-point between the bid and ask on the fund’s principal trading market when the fund’s NAV is determined, which is typically 4 pm eastern time (US). These returns will not represent your returns had you traded shares at other times.
Effective April 30th, 2018 the funds changed their end-of-day market price calculation methodology. Subsequently, all prior periods have been restated as well. As a result, data shown using market price (including market price returns and premiums/discounts) may be higher or lower than previously shown.
Shareholders may pay more than net asset value when they buy Fund shares and receive less than net asset value when they sell those shares, because shares are bought and sold at current market prices.
*Distribution rate is calculated by annualizing the most recent distribution amount paid, excluding special distributions, divided by the closing market price or NAV.
**Gross expenses are the Fund's total annual operating expenses. Net expenses reflect contractual fee waivers and/or reimbursements, where these reductions reduce the Fund's gross expenses, which cannot be terminated prior to Mar 01, 2020 without Board consent.
IMPORTANT HOLDINGS INFORMATION: Portfolio holdings are based on total portfolio, and are subject to change at any time. Holdings are provided for informational purposes only and should not be construed as a recommendation to purchase or sell any security. Any negative allocations or allocations in excess of 100% are primarily due to unsettled trade activities.
Distributions are not guaranteed and are subject to change.
The per share distribution amounts presented above reflect the distribution rates that were paid to shareholders on the indicated payable dates. The character of distributions for certain funds may have been subsequently adjusted for tax purposes. Shareholders can determine which funds may have reclassified the tax character of distributions by visiting the Tax Center in Account Services. Information on reclassifications for distributions paid during the current calendar year will not be available until the first quarter of the following year.
When the value of a fund holding increases, the fund has an unrealized capital gain until the fund sells or otherwise disposes of the holding. Upon disposition of the appreciated holding, the fund realizes the gain. Under U.S. tax laws, during its taxable year, a fund must distribute all capital gains that it has realized from the disposition of fund holdings, net of realized losses, so the fund will not be subject to an entity level income tax.
Consequently, a fund’s capital gain distribution in a particular year is a result of the disposition of holdings that may have appreciated in value, perhaps during prior years when the fund’s returns were positive. To the extent that a fund has long-term capital gains that exceed current period and deferred short-term capital losses from a prior year, a fund may have distributable gains that will be distributed to shareholders. Such gains would be distributed to shareholders as a long-term capital gain distribution no matter how long the shareholder has owned shares in the mutual fund.
While the fund may itself gain or lose value over the course of a year, a capital gain distribution paid by the fund may not be indicative of current performance of the fund. The distributable amount of net capital gains are calculated under U.S. tax laws and are paid on a per-share basis to all investors who hold shares of the fund on the record date of the distribution. A shareholder must report the amount of net gains distributed to them on their income tax return regardless of when the gains or losses arose in the fund.
Please see a fund’s annual report for specific information regarding distributions and unrealized capital gains.
Legg Mason, Inc., its affiliates, and its employees are not in the business of providing tax or legal advice to taxpayers. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties or complying with any applicable tax laws or regulations. Tax-related statements, if any, may have been written in connection with the promotion or marketing of the transaction(s) or matter(s) addressed by these materials, to the extent allowed by applicable law. Each investor’s tax situation is different, and is based on an individual’s tax bracket, type of account used for investment and other factors. Any such taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor.
IMPORTANT INFORMATION: All investments involve risk, including loss of principal. Past performance is no guarantee of future results. Please see each product’s webpage for specific details regarding investment objective, risks, performance and other important information. Review this information carefully before you make any investment decision. Investors cannot invest directly in an index, and unmanaged index returns do not reflect any fees, expenses or sales charges.
Carefully consider a fund’s investment objectives, risks, charges and expenses before investing. Please view the prospectus or summary prospectus for this and other information. Read it carefully.
Authorized participants ("APs") may acquire shares in the primary market directly from the ETFs and may tender their shares for redemption directly to the ETFs, at net asset value per share only in Creation Units or Creation Unit Aggregations. Once created, shares of the funds generally trade in the secondary market in amounts less than a Creation Unit.
Retail investors buy and sell shares of ETFs at market price (not NAV) in the secondary market throughout the trading day. These shares are not individually available for purchase or redemption directly from the ETF.
Legg Mason Investor Services, LLC (LMIS) serves as the distributor of Creation Units for the ETFs on an agency basis. LMIS does not maintain a secondary market in the funds' shares.
If you are neither a resident nor a citizen of the United States or if you are a non-U.S. entity, the ETF's ordinary income dividends (which include distributions of net short-term capital gains) will generally be subject to a 30% U.S. federal withholding tax, unless a lower treaty rate applies. For further information, please see each fund’s prospectus.
Redemption payments will be effected within the specified number of calendar days following the date on which a request for redemption in proper form is made. Please see each fund’s statement of additional information (SAI) for more information.
FINANCIAL ADVISORS: Please note that not all products may be available for sale at your firm. Please call the Legg Mason Sales Desk 1-800-822-5544 or your Legg Mason Sales contact for more information.
Exchange Traded Funds (ETFs) — A type of investment company which is bought and sold on a securities exchange. ETFs generally represent a portfolio of securities, derivative instruments, currencies or commodities. The risks of owning an ETF generally reflect the risks of owning the underlying securities or commodities the ETF is designed to track. ETFs also have management fees and operating expenses that increase their costs.
Legg Mason, Inc., its affiliates, and its employees are not in the business of providing tax or legal advice to taxpayers. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties or complying with any applicable tax laws or regulations. Tax-related statements, if any, may have been written in connection with the “promotion or marketing” of the transaction(s) or matter(s) addressed by these materials, to the extent allowed by applicable law. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.