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Fixed Income Investing in a Low Growth World Dipankar Shewaram Citywire Newcits Retreat 1-3 December 2010 This document is for Asset Managers, Fund Distributors and Authorised Intermediaries. Not for use by Private Individuals.
Western Asset Page Source: Assets under management in USD (billions), as of 30 Sep 10. Total AUM: $469.4 7 Countries Singapore $2.0 Tokyo $43.0 Hong Kong New York $164.8 London $50.0 Melbourne $9.0 São Paulo $15.8 Pasadena $184.8
Western Asset Page Source: Western Asset as of 20 Oct 10. Brendan A. Bowman (5 yrs) – US Investment-Grade Credit & High-Yield Credit/Leveraged Loans Investment-Grade Credit Ryan K. Brist, CFA (17 yrs) – US Blanton Keh, CFA (10 yrs) – US Takahiro Omura, CFA (18 yrs) – Japan Dipankar Shewaram, CFA (13 yrs) – UK Jeffrey Van Schaick, CFA (29 yrs) – US Stephen A. Walsh (29 yrs) Chief Investment Officer Michael C. Buchanan, CFA (20 yrs) Head of Credit High-Yield Credit/Leveraged Loans Michael C. Buchanan, CFA (20 yrs) – US Ian R. Edmonds (20 yrs) – UK Timothy J. Settel (17 yrs) – US Emerging Markets Credit Matthew Duda, CFA (17 yrs) – US Portfolio Managers Research Rene Ledis (17 yrs) – US Basic Industries/Utilities/Energy DeAndre L. Parks, CFA (17 yrs) – US Healthcare / Consumer Products / Retail Davis Smith (21 yrs) – US Communications Ivor Schucking (19 yrs) – US Financial Institutions Adrian Chee (18 yrs) – Singapore Asian Investment-Grade & Financials Kailash Chhaya, CFA (9 yrs) – Japan Credit Analyst David Klein (13 yrs) – UK Consumer Products, Retail Sean Rogan (21 yrs) – Australia Credit Analyst Trading J. Gibson Cooper, CFA (23 yrs) – US Chemicals, Energy, Pipelines & Gas Distribution Arvinder S. Chowdhary, CFA (15 yrs) – UK European High-Yield Credit Thomas R. Galloway (18 yrs) – US Healthcare, Gaming, Lodging, REITS, Pharmaceuticals Henrietta Gourlay (11 yrs) – Singapore Asian High-Yield Christopher N. Jacobs, CFA (22 yrs) – US Distressed, Media, Environmental, Brokerage/Insurance/Finance Araceli M. Sibley (18 yrs) – US Consumer Products, Entertainment, Restaurants, Consumer Services, Textiles Suzanne M. Trepp, CFA (20 yrs) – US Aerospace/Defense, Transportation, Retail, Food & Beverage, Tobacco Robert Abad (21 yrs) – US EMD Credit Analyst Marcos Collina (25 yrs) – Brazil Banks, Financials Daniel Araujo (26 yrs) – Brazil Industrials Oberto Alvarez (17 yrs) – US Chetna Mistry (13 yrs) – UK Walter E. Kilcullen (13 yrs) – US Charles Shia (14 yrs) – US Kevin Ritter, CFA (12 yrs) – US Christopher Kilpatrick (13 yrs) – US Telecom, Cable Portfolio Analyst Dan Alexander, CFA (6 yrs) – US Sophala Chhoeng (5 yrs) – US Matthew Graves, CFA (5 yrs) – US Product Specialist Shing Chi (Charles) Poon, CFA (12 yrs) – US Jeffrey Nuruki, CFA (13 yrs) – US Credit Analyst Taylor Dowling (9 yrs) – Australia Ian Justice (12 yrs) – UK Whole Business Securitization Samira Sattarzadeh (8 yrs) – UK Vivek K. Acharya (9 yrs) – UK Thomas V. McMahon (31 yrs) – US Investment-Grade Credit & High-Yield Credit/Leveraged Loans Mark A. Hughes, CFA (12 yrs) – US Automotive, Media Non-Cable, Industrials, Building Products, Rental Service John M. King, CFA (13 yrs) – US Utilities, Metals & Mining, Packaging, Paper & Forest Products Tobias Grün (22 yrs) – UK Financial Institutions Paul S. Olsen (27 yrs) – US Generalist, Liquidity Edward T. Ma, CFA (8 yrs) – US Kurt D. Halvorson, CFA (9 yrs) – US James Newbery (15 yrs) – UK European Credit Roderick MacPhee (7 yrs) – UK Ruchi Gupta (12 yrs) – UK European High-Yield Credit
Page iTraxx Europe Main CDS index 0 50 100 150 200 250 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Spread (bps) Source: Bloomberg, Western Asset. As of 30 Sep 10. Returns for shaded regions shown in bold. 1.13 -3.18 6.44 -2.89 3.26 -6.91 4.35 -5.87 1.65 -2.07 0.14
Page Source: * Ca sh Bonds & Single Name CDS Delta Adj Wht (%) Spread Duration (yrs) Duration (yrs) Cash Cash Equivalents Currency Forwards US Governments Euro Governments UK Governments Norway Governments IG Financials* IG Non-financials* High Yield* iTraxx Main iTraxx Crossover iTraxx Main Options iTraxx Crossover Options iTraxx SOVXWE Options
Legg Mason Western Asset Global Credit Absolute Return Fund
Long: Long Financials across the capital structure
Short: Short Non-Financials using CDS indices and single name CDS
Interest Rate Risk: Tactical approach to duration management
Currency: Short Australian Dollar and Euro versus long in US Dollar
Page Source: Western Asset as at 30 September 2010
Legg Mason Western Asset Global Credit Absolute Return Fund Performance since launch Page Source: Legg Mason at at 30 September 2010 Source: Legg Mason as of 30 September 2010. Performance shown is net of investment management fees.
Legg Mason Western Asset Global Credit Absolute Return Fund Page Net Asset Value (NAV) Since Launch Source: Western Asset as of 12 th November 2010 Value Date
This information has been prepared from sources believed reliable but is not guaranteed by Legg Mason Investments and is not a complete summary or statement of all available data. Individual securities mentioned are intended as examples of portfolio holdings and are not intended as buy or sell recommendations. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation or needs of individual investors.
Western Asset Management is affiliated with Legg Mason through common control and ownership by Legg Mason, Inc.. Legg Mason provides its clients with access to Western Asset Management primarily through its range of Irish and UK authorised funds in which Western Asset Management serves as investment manager or sub-investment manager. Some of the affiliates are not authorised to offer their investment advisory services in all European jurisdictions.
The Legg Mason Western Asset Global Credit Absolute Return Fund is a sub-fund of Legg Mason Global Funds plc, an umbrella fund with segregated liability between sub-funds, established as an open-ended investment company with variable capital and incorporated with limited liability under the laws of Ireland with registered number 278601. It qualifies and is authorised in Ireland by the Financial Regulator as an undertaking for collective investment in transferable securities and is a section 264 Scheme as recognised by the FSA. This Fund is offered solely to non-US investors under the terms and conditions of the Fund’s current prospectus - please refer to the Simplified Prospectus and Prospectus documentation, which describe the full risk factors associated with this Fund.
This document does not constitute an invitation to invest. The value of investments and the income from them can go down as well as up and investors may not get back the amounts originally invested. Fluctuations in exchange rates can affect the value of the Fund and the income from it.
The fund may invest in ‘non-investment grade’ bonds, which carry a higher degree of default risk than ‘investment grade’ bonds.
The Legg Mason Western Asset Global Credit Absolute Return Fund may invest in emerging markets that may be less liquid and may have less reliable custody arrangements than mature markets and may involve a higher degree of risk. Unlike a bank or building society account, your money is at risk.
This Fund may invest extensively in certain types of financial derivative instruments (FDIs) for efficient portfolio management or investment purposes. These instruments involve additional and higher levels of risk including but not limited to market risk, liquidity risk, counterparty risk and operations risk.
This Fund may use eligible derivatives to hedge their foreign currency exposure back to the class currency. Hedging transactions can reduce the effects of currency and asset fluctuations but can expose additional risks, e.g. counterparty default.
Due to its investment policies, this Fund may have particularly volatile performance.
Issued and approved by Legg Mason Investments (Europe) Limited, registered office 75 King William Street, London, EC4N 7BE. Registered in England and Wales, Company No. 1732037. Authorised and regulated by the Financial Services Authority. Client Services 0207 070 7400.
This document is for use by asset managers, fund distributors and authorised intermediaries. Not for use by private individuals.