Legg Mason Global Value ADR Balanced Portfolios (60/40)

INVESTMENT OVERVIEW

Legg Mason Global Value ADR Balanced Portfolios is designed to provide investors with a value-based, balanced strategy that seeks to provide long-term total return along with the potential stability and additional income that fixed income can provide. Comprised of 60% ClearBridge Global Value ADR Equity Portfolios and 40% Western Asset Gov/Corp Portfolios, the Portfolio offers a balanced approach to diversification.
 

INVESTMENT OBJECTIVE

The strategy seeks to:

  • Outperform its blended benchmark of 60% MSCI World Index (Net) (USD) and 40% Bloomberg Barclays Intermediate Government/Credit Bond Index over 3-5 years
  • Achieve long-term capital appreciation
  • Utilize fixed income as an anchor to manage volatility in the overall portfolio, as well as provide preservation of principal

Investments

  • 60% allocation to global companies with American Depositary Receipts (ADRs) listed on the major U.S. exchanges whose market capitalizations exceed $100 million and whose market prices are attractive in relation to their underlying fundamentals
  • 40% allocation to U.S. government and corporate debt securities
 

INVESTMENT PHILOSOPHY

We believe that:

  • A globally focused total return portfolio – combined with the potential added stability of bonds – has the potential to outperform over the long term
  • Solid risk-adjusted returns may be achieved by balancing upside participation in good markets, while trying to limit downside risk during difficult markets
 

INVESTMENT
PROCESS

Equity investment process

Fixed Income investment process

Universe of securities

Identify publicly traded U.S.-listed and ADR securities across 11 macro sectors in both developed and emerging markets, each with a market capitalization greater than $100 million and sufficient liquidity

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

Quantitative modeling

Sell stocks below their normal valuation levels by employing a quantitative model that compares current valuations (as measured by price-to-earnings, price-to-book and price-to-cash flow ratios) to historical valuations

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.

Company elimination

To eliminate stocks with negative characteristics and barriers to success. These factors could include a declining quality of financial characteristics, deteriorating industry conditions or competitive position, or a lack of confidence in company management

Sector allocation

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

Fundamental analysis

Use a comprehensive fundamental research process to understand the business of each company and focus on long-term value, rather than short-term price or earnings forecasts

Issue selection

Using a bottom-up process, the Firm seeks to identify companies that may add value to the portfolio

Client portfolio

Construct the portfolio consisting of 65-95 holdings. Positions are weighted based upon upside potential, downside risk, our fundamental conviction, and the impact on diversification

Sell discipline

Offer a reward/risk trade-off on new investments that are more favorable than that of the existing holdings, or essential steps toward a successful recovery fail to materialize (within the allotted 18-month timeframe), causing a fundamental change in the security’s upside potential

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 and proprietary research, supported by robust risk management and a long-term fundamental value approach.


With a legacy dating back over 50 years, ClearBridge Investments is a leading global equity manager committed to delivering differentiated long-term results through authentic active management.


Paul D. Ehrlichman

Managing Director, Head of Global Value Equity, Portfolio Manager

Sean M. Bogda, CFA

Managing Director, Portfolio Manager

Safa R. Muhtaseb, CFA

Managing Director, Portfolio Manager

Grace Su

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 Global Value ADR Balanced Taxable (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.  The managers invest the portfolios primarily in ADRs, but may also make limited investments in U.S.-traded stocks of non-U.S. and U.S. companies engaged in significant non-U.S. business. These limited investments may include U.S.-traded stocks that result from the conversion of ADRs, as well as other U.S.-traded stocks. The portfolios' investments in non-U.S. companies may include companies in developed and emerging markets which involve risks in addition to those ordinarily associated with investing in U.S.-traded stocks, including the potentially negative effects of currency fluctuation, political and economic developments, foreign taxation and differences in audition and other financial standards.  These risks are magnified in emerging markets. 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.  U.S. Treasuries are direct debt obligations issued and backed by the "full faith and credit" of the U.S. government. The U.S. government guarantees the principal and interest payments on U.S. Treasuries when the securities are held to maturity. Unlike U.S. Treasury securities, debt securities issued by the federal agencies and instrumentalities and related investments may or may not be backed by the full faith and credit of the U.S. government.  Even when the U.S. government guarantees principal and interest payments on securities, this guarantee does not apply to losses resulting from declines in the market value of these securities.  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.

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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Legg Mason Global Value ADR Balanced Taxable with Gov/Corp 60/40 GIPS Endnotes Strategy Inception Date: February 2016. Composite Creation Date: January 2016. Reporting Currency: USD.
Period Total Return (Net, %)
Total Return (*Pure Gross, %)
Benchmark Return (%)
Number of Portfolios
% of Bundled Fee Portfolios in the Composite
Composite Dispersion (%)
Composite 3 Yr. St. Dev. (%)
Benchmark 3 Yr. St. Dev. (%)
Total Composite Assets at End of Period (USD million)
Percentage of Firm Assets
Total Firm Assets at End of Period (USD million)
2018 -11.60 -8.92 -4.75 17 100 0.23 n/a 6.17 7.0 0.0 50,961.6
2017 9.88 13.15 13.90 29 100 0.14 n/a n/a 12.2 0.0 53,956.9
Feb -
Dec 2016
6.76 9.67 8.85 19 100 n/a n/a n/a 8.6 0.0 46,104.9

*Pure gross of fee returns do not reflect the deduction of any expenses, including transaction costs, and are presented as supplemental to the net of fee returns.

n/m - Information is not statistically meaningful due to an insufficient number of portfolios in the composite for the entire year.

Compliance Statement:
Legg Mason Private Portfolio Group, LLC ("LMPPG") claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. Legg Mason Private Portfolio Group, LLC has been independently verified for the periods January 1, 2013 - December 31, 2018. The verification reports are available upon request.

Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm's policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.

Firm Information:
Legg Mason Private Portfolio Group, LLC is a wholly-owned subsidiary of Legg Mason, Inc.  LMPPG, together with its Subadvisers, ClearBridge Investments, LLC ("ClearBridge"), Martin Currie Inc. ("Martin Currie"), QS Investors, LLC ("QS"), RARE Infrastructure (North America) Pty Ltd ("RARE"), Royce & Associates, LP ("Royce") and Western Asset Management Company (“Western Asset”), provides investment advisory services primarily in investment programs sponsored by Sponsor Firms. The investment advisory services LMPPG and the Subadvisers provide differ depending on the type of Sponsor Firm investment program in which a client participates.  ClearBridge claims compliance with the Global Investment Performance Standards (GIPS®).  ClearBridge has been independently verified for the periods January 1, 1997 - December 31, 2018.  ClearBridge Investments, LLC ("ClearBridge") is a wholly owned subsidiary of Legg Mason, Inc. ("Legg Mason").  The investment advisory business now known as ClearBridge was registered in September 2005 to facilitate Legg Mason's acquisition of substantially all the equity asset management businesses known as Citigroup Asset Management.  These former businesses serve as the foundation of ClearBridge and its claim of GIPS compliance for institutional accounts through predecessor firms, effective as of January 1997.  In June 2008, ClearBridge combined this business with its retail business to form a single GIPS firm.  As of April 1, 2013 and January 1, 2016, ClearBridge's affiliates, Global Currents Investment Management, LLC, and ClearBridge, LLC, respectively, have become part of the ClearBridge GIPS firm.  To obtain a compliant presentation and/or the firm’s list of composite descriptions, please contact info@clearbridge.com.   Martin Currie claims compliance with the Global Investment Performance Standards (GIPS®).  Martin Currie  has been independently verified though December 31, 2017.  Martin Currie, which encompasses Martin Currie Investment Management Ltd and Martin Currie Inc. Martin Currie is a wholly owned subsidiary of Legg Mason, Inc. (“Legg Mason”) but operates autonomously, and Martin Currie, as a firm, is held out to the public as a separate entity.  To obtain a compliant presentation and/or the firm’s list of composite descriptions, please contact enquiries@martincurrie.com.  QS Investors claims compliance with the Global Investment Performance Standards (GIPS®).  QS has been independently verified for the periods August 1, 2010 through December 31, 2018.   QS Investors, LLC (“QS Investors” or “the Firm”), is a registered investment adviser with the Securities and Exchange Commission, providing investment and advisory services to a diverse array of institutional, retail and sub-advisory clients worldwide. Registration as an investment adviser does not imply any level of skill or training.  The Firm is headquartered in New York City with an additional office in Boston, Massachusetts. The Firm provides discretionary and non-discretionary advice and investment management to domestic and international clients based on their investment objectives, guidelines, and risk tolerance, each of which may be customized to address specific client needs. QS Investors, LLC launched in August 2010 and became a wholly-owned, independently managed subsidiary of Legg Mason, Inc. on May 31, 2014. As part of this transaction, Legg Mason merged QS Batterymarch Financial Management, Inc. (“QS Batterymarch”) and QS Legg Mason Global Asset Allocation, LLC (“QS LMGAA”), two other subsidiaries, into QS Investors.  To obtain a compliant presentation and/or the firm’s list of composite descriptions, please contact Keri Mclaughlin at Keri.Mclaughlin@qsinvestors.com.  RARE claims compliance with the Global Investment Performance Standards (GIPS®).  RARE has been independently verified for the periods August 31 2006 through December 31, 2017.  For purposes of compliance with the GIPS® the Firm is defined as RARE Infrastructure Limited ("RIL") and its relevant subsidiaries, being RARE Infrastructure (North America) Pty Ltd, RARE Infrastructure International Pty Ltd and RARE Infrastructure USA Inc. (together "RARE"). RIL performs the role of investment manager and subadvisor for RARE in the delivery of services to both domestic and global institutional clients, funds and retail end users.  RIL has global developed and developing listed equity infrastructure investment objectives based on its proprietary investment and research model. RIL is a majority owned, independently operated subsidiary of Legg Mason, Inc.  To obtain a compliant presentation and/or the firm’s list of composite descriptions, please contact operations@rareinfrastructure.com.  Royce claims compliance with the Global Investment Performance Standards (GIPS®).  Royce has been independently verified for the periods January 1, 2008 through December 31, 2018.  For the purpose of complying with the GIPS standards, the Firm is defined as Royce & Associates, LP (“Royce”). Royce is registered with the U.S. Securities and Exchange Commission (the “SEC”) as an investment adviser (SEC File No. 801-8268).  To obtain a compliant presentation and/or the firm’s list of composite descriptions, please contact Tara Francoeur at tara@roycefunds.com.    Western Asset claims compliance with the Global Investment Performance Standards (GIPS®).  Western has been independently verified for the periods January 1, 1993 to December 31, 2018. For GIPS® purposes, the Firm is defined as Western Asset, a primarily fixed-income investment manager comprised of Western Asset Management Company, LLC; Western Asset Management Company Limited, authorised and regulated by the Financial Conduct Authority ("FCA"); Western Asset Management Company Pte. Ltd. Co. Reg. No. 200007692R, holder of the Capital Markets Services Licence for fund management and regulated by the Monetary Authority of Singapore; Western Asset Management Company Ltd, a registered Financial Instruments Business operator and regulated by the Financial Services Agency of Japan; Western Asset Management Company Pty Ltd ABN 41 117 767 923, holder of the Australian Financial Services Licence 303160; and Western Asset Management Company Distribuidora de Títulos e Valores Mobiliários (DTVM) Limitada, authorised and regulated by Comissão de Valores Mobiliários and Banco Central do Brazil, with offices in Pasadena, New York, London, Singapore, Tokyo, Melbourne, São Paulo, Hong Kong, and Zürich. Each Western Asset company is a wholly owned subsidiary of Legg Mason, Inc. ("Legg Mason") but operates autonomously, and Western Asset, as a Firm, is held out to the public as a separate entity. Western Asset Management Company was founded in 1971.  To obtain a compliant presentation and/or the firm’s list of composite descriptions, please contact Michael Van Raaphorst at 212-601-6211 or Michael.VanRaaphorst@westernasset.com.  LMPPG has used Subadvisers for all periods presented.

Composite Information:
The Legg Mason Global Value ADR Balanced Taxable with Gov/Corp 60/40 composite consists of discretionary wrap accounts with an account minimum of US $25,000.  The strategy is designed to provide investors with a value-based, balanced strategy that seeks to provide long-term total return along with the stability and additional income that fixed income can provide. The main risks of this strategy are General Investment Risk, Non-U.S. Investment Risk. Small Cap Risk, Mid Cap Risk, Credit Risk, Interest Rate Risk, and Illiquidity Risk.

Input and Calculation Data:
The fee schedule currently in effect is 3.00% on all assets.  Net of fee composite returns are calculated by reducing each monthly composite pure gross rate of return by the highest "bundled" fee charged (3.00%) annually, prorated to a monthly ratio.  The "bundled" fee includes transaction costs, investment management, custodial, and other administrative fees.  The internal dispersion of annual returns is measured by the asset-weighted standard deviation of portfolio returns included in the composite for the entire year.  The three-year annualized ex-post standard deviation is not available because the composite does not have 36 months of GIPS compliant data.  A list of composite descriptions is available upon request.  Policies for valuing portfolios, calculating performance, and preparing compliant presentations are availableupon request. Past performance is not necessarily indicative of future results.

Benchmark Information:
The composite uses the following blended benchmark 60% MSCI World (Net) (USD) / 40% Bloomberg Barclays U.S. Intermediate Government/Credit which is rebalanced monthly.  Benchmark returns are not covered by the report of independent verifiers.

The MSCI World® Index captures large and mid cap representation across developed market countries.  The "Net" Index series assumes that dividends are reinvested after the deduction of withholding tax. The index uses withholding tax rates applicable to Luxembourg holding companies.  Benchmark returns are not covered by the report of independent verifiers.

The Bloomberg Barclays® U.S. Intermediate Government/Credit Index includes securities in the intermediate maturity range of the Government/Credit Index.

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.

Certain SMA products may not be available at all firms. 

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