Legg Mason Appreciation Balanced Tax-Favored Portfolios (60/40)

INVESTMENT OVERVIEW

Legg Mason Appreciation Balanced Tax Favored Portfolios seeks long-term capital appreciation by emphasizing blue-chip growth and value stocks, and utilizing municipal bonds to limit portfolio volatility and offer a balanced approach to diversification.

 

INVESTMENT OBJECTIVE

The strategy seeks to:

  • Achieve long-term capital appreciation
  • Utilize fixed income to limit volatility in the overall portfolio, as well as to provide income, some of which is taxable and some of which is exempt from regular U.S. income tax
     

INVESTMENT PHILOSOPHY

We believe that:

  • Solid and competitive risk-adjusted returns may be achieved by investing in a diversified portfolio of growth and value stocks— consisting primarily of large capitalization, blue-chip companies— combined with the potential stability of bonds. The lead equity managers may also invest in select mid- and small-capitalization companies
  • Balance upside participation in good markets, while trying to limit downside risk during difficult markets
     

INVESTMENT
PROCESS

Equity investment process

Fixed Income investment process

Define the investment universe

Emphasize domestic large-capitalization stocks, but also consider mid- and small- capitalization companies and ADRs of foreign companies opportunistically

Interest rate exposure/Duration weighting

Western Asset’s investment team comprehensively analyzes a variety of domestic and international macroeconomic factors to establish a duration target

Evaluate stocks using proprietary discipline 

Screen for high-quality companies with dominant market positions, proven management teams and superior balance sheets across all market sectors

Term structure weighting

The Firm carefully employs strategies in an attempt to take advantage of changes in the yield curve’s shape and shifts in the relationship between short-, intermediate-, and long-maturity securities.

Select securities and construct portfolio

Conduct fundamental research to identify companies with attractive growth characteristics relative to their valuation levels, with a range of 80-100 stocks

Sector allocation

Western Asset believes that the value can be added to a portfolio by actively rotating among, and within, different sectors of the Municipal bond market. The investment team studies the fundamental factors that influence sector spread relationships

Review holdings continuously

  • Re-examine a current holding when valuation is realized, fundamentals deteriorate, insiders are selling and/or cyclical shifts alter industry’s attractiveness.
  • The managers may sometimes hold significant cash reserves as a portion of the portfolio while waiting for buying opportunities.

Issue allocation

Using a bottom-up process, the Firm seeks to identify issuers with changing credit characteristics and securities that are undervalued and out of favor due to unusual circumstances.

The investment process may change over time. The characteristics set forth above are intended as a general illustration of some of the criteria the strategy team considers in selecting securities for client portfolios. There is no guarantee investment objectives will be achieved.

 

 

Meet your Managers

One of the world’s leading global fixed income managers. Founded in 1971, the firm is known for team management, proprietary research and long-term fundamental value approach.


Global investment manager with over 50 years of experience and long-tenured portfolio managers who seek to build income, high active share or low volatility portfolios.


Scott Glasser

Co-Chief Investment Officer, Managing Director, Portfolio Manager

Michael Kagan

Managing Director, Portfolio Manager

Active share is a measure of the percentage of stock holdings in a manager's portfolio that differs from the benchmark index.

To find out more about the Legg Mason Appreciation Balanced Tax Favored (60/40) Portfolios, talk to your Financial Advisor.


 

What I Should Know
Before Investing

All investments involve risk, including loss of principal and there is no guarantee that investment objectives will be met.  Investments may be made in small- and mid-cap companies, which involve a higher degree of risk and volatility than investments in large-cap companies.  While most investments are in U.S. companies, investments may also be made in ADRs and other securities of non-U.S. companies in developed and emerging markets which involve risks in addition to those ordinarily associated with investing in domestic securities, including the potentially negative effects of currency fluctuation, political and economic developments, foreign taxation and differences in auditing and other financial standards. These  risks are magnified in emerging markets.  Limited investments also may be made in non-dividend paying stocks that are not expected to pay a dividend in the near future.  The managers may sometimes hold significant portions of portfolio assets in cash equivalents while waiting for buying opportunities.  Fixed income securities are subject to interest rate and credit risk, which is a possibility that the issuer of a security will be unable to make interest payments and repay the principal on its debt. As interest rates rise, the price of fixed income securities falls.  Fixed income securities are subject to illiquidity risk, which is the risk that securities may be difficult to sell at certain prices when no market participants are willing to purchase the securities at such prices.  Tapering of the Federal Reserve Board's quantitative easing program and a general rise in interest rates may lead to increased portfolio volatility.

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IMPORTANT INFORMATION: Past performance is no guarantee of future results. Management and performance of individual accounts may vary for reasons that include the existence of different implementation practices and model requirements in different investment programs.

Pure Gross performance shown does not reflect the deduction of investment management fees and certain transaction costs, which will reduce portfolio performance. Net Performance includes the deduction of a 3% annual wrap fee for equity and balanced portfolios and a 1.5% annual wrap fee for fixed income portfolios. These deducted fees amounts are the maximum anticipated wrap fees. Actual fees may vary. For fee schedules, contact your financial professional or, if you enter into an agreement directly with Legg Mason Private Portfolio Group, LLC ("LMPPG"), refer to LMPPG's Form ADV disclosure document. Returns reflect the reinvestment of dividends and other earnings.

An investor cannot invest directly in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges.

Performance Source: Legg Mason

Hypothetical growth of dollars: For illustrative purposes only. Assumes no withdrawals or contributions. The performance results shown were calculated assuming reinvestment of dividends and income and take into account both realized and unrealized capital gains and losses.

PERFORMANCE CALCULATION:

Legg Mason Appreciation Balanced Portfolios (60/40) composite performance has the approximate target allocation of: 60% equity and 40% fixed income components. The Index Mix is comprised of 60% S&P 500 Index and 40% Bloomberg Barclays U.S. Intermediate Treasury Bond indices, rebalanced monthly. Unlike the indices included in the Index Mix, investment styles included in balanced portfolios are not automatically rebalanced each month.

Performance returns for periods prior to January 2006 are based on the performance of a composite of accounts from a formerly-affiliated sponsor channel, which represented an overwhelming majority of the strategy’s retail assets under management during such periods. Such pre-2006 returns were calculated on an equal-weighted basis where each portfolio contributed an equal weight to the resulting composite return regardless of its asset size. Performance returns for periods subsequent to January 2006 are based on the composite performance of all discretionary retail managed accounts in the strategy. Such post-2005 returns were calculated on an asset-weighted basis where each portfolio contributed to the resulting composite return proportionately based on asset size.

PERFORMANCE CALCULATION:

Legg Mason Appreciation Balanced Portfolios (Tax Favored) composite performance has the approximate target allocation of: 60% equity and 40% fixed income components. The Index Mix is comprised of 60% S&P 500 Index and 40% Bloomberg Barclays 5-Year Municipal Bond indices, rebalanced monthly. Unlike the indices included in the Index Mix, investment styles included in balanced portfolios are not automatically rebalanced each month.

Performance returns for periods prior to January 2006 are based on the performance of a composite of accounts from a formerly-affiliated sponsor channel, which represented an overwhelming majority of the strategy’s retail assets under management during such periods. Such pre-2006 returns were calculated on an equal-weighted basis where each portfolio contributed an equal weight to the resulting composite return regardless of its asset size. Performance returns for periods subsequent to January 2006 are based on the composite performance of all discretionary retail managed accounts in the strategy. Such post-2005 returns were calculated on an asset-weighted basis where each portfolio contributed to the resulting composite return proportionately based on asset size.

IMPORTANT INFORMATION: Separately Managed Accounts (SMAs) are investment services provided by Legg Mason Private Portfolio Group, LLC (LMPPG), a federally registered investment adviser. Client portfolios are managed based on investment instructions or advice provided by one or more of the following Legg Mason-affiliated sub-advisers: ClearBridge Investments, and Western Asset Management Company. Management is implemented by LMPPG, the designated sub-adviser or, in the case of certain programs, the program sponsor or its designee.


Professional money management may not be suitable for all investors. Factual information relating to the securities discussed was obtained from sources believed to be reliable, but there can be no guarantee as to its accuracy. It should not be assumed that investments made in the future will be profitable or will equal the performance of the securities discussed in the material.

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GIPS End Notes not applicable for this product
Not Applicable

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 associated with hedge funds, alternative investments and other risks, performance and other important information. Review this information carefully before you make any investment decision.

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