Legg Mason US Diversified Core ETF (UDBI) seeks to track the investment results of an underlying index composed of publicly traded U.S. equity securities from the MSCI USA IMI Index.
- UDBI may benefit investors seeking a core holding with the potential for improved risk management and a risk/return profile that can complement existing cap-weighted products.
Underlying index: QS DBI US Diversified Index (the Index):
- The process initially categorizes the universe of securities by industry, weighted by market capitalization.
- Based on historical performance, it groups highly correlated industries into eight different “clusters.”
- Each cluster is then equally weighted in the Index with the goal of producing a well- diversified portfolio.
- The Index may include 2,200 to 2,500 large, medium and small capitalization companies which are reconstituted annually and rebalanced quarterly.
MEET YOUR MANAGERS
QS Investors is a quantitative asset manager that provides multi-asset class and global equity solutions. Their approach unites intellectual and academic precision with the power of data and technology in their quest to elevate the certainty of outcomes they deliver.
Russell Shtern, CFA (industry since 1998), Robert Wang (industry since 1982) and Michael LaBella, CFA (industry since 2005) have been associated with the Fund since 2015, have leadership responsibility for the day-to-day management of the Fund and each is responsible for the strategic oversight of the Fund's investments.
The managers are responsible for the strategic oversight of the fund's investments. Their focus is on portfolio structure, and they are primarily responsible for ensuring that the fund complies with its investment objective, guidelines and restrictions and current investment strategies.
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.
Russell Shtern, CFA
Head of Equity Portfolio Management
Head of Portfolio Management
Michael J. LaBella, CFA
Head of Global Equity Strategy
The QS DBI US Diversified Index (the “Index”) seeks to provide exposure to equities of U.S. companies and is based on a proprietary methodology created and sponsored by QS Investors, LLC (“QS”). The Index is composed of U.S. companies that are included in the MSCI USA IMI Index. The proprietary rules-based process initially groups this universe of securities into multiple investment categories based on industries. Within each of these investment categories, securities are weighted by market capitalization. The process then combines those investment categories with more highly correlated historical performance into a smaller number of “clusters.” A cluster is a group of investment categories based on industry that have demonstrated a tendency to behave similarly (high correlation). Thereafter, each of these clusters is equally weighted in the Index to produce a highly diversified portfolio. QS anticipates that the number of component securities in the Index will range from 2,200 to 2,500. The Index may include large, medium and small capitalization companies. The components of the Index, and the degree to which these components represent certain industries, may change over time. The Index’s components are reconstituted annually and rebalanced quarterly.
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. 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. Diversification does not guarantee a profit or protect against a loss. 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. There are currently no fee waivers in effect, so gross and net expenses are identical. The Gross and Net Expenses listed include 0.00 of Acquired Fund Fees and Expenses ("AFFE") that are required to be shown in the Fund's prospectus. AFFE reflects the Fund's pro rata share of fees and expenses relating to its investments in acquired funds; however, AFFE are not incurred directly by the Fund. Therefore, AFFE are not reflected in the Fund's audited financial statements or financial highlights.
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.
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.