group is set to add three offshore portfolios including at least one fixed interest fund
Legg Mason Investments is to convert its eight unit trusts into an Oeic umbrella and introduce up to three additional vehicles in the late summer.
The group is also in the process of consolidating its two offshore fund ranges by closing its non-Ucits Caribbean operation and merging the portfolios into its Dublin-domiciled Oeic, expanding the offshore range by five funds.
The Oeic conversion, targeted for late August or early September and subject to unitholder approval, will be used to introduce a number of funds managed by other wholly-owned subsidiaries of the Legg Mason Inc parent group. UK-based Legg Mason Investments operates alongside 15 sister groups within the Legg Mason Inc stable.
Deepak Chowdhury, chief executive of Legg Mason Investments, said the group is still working through which funds to bring over from its subsidiaries, but will definitely launch at least one fixed interest fund managed by Western Asset Management.
'Seven of our eight unit trusts are equity funds, so the likelihood is the focus will be tilted towards the fixed interest side,' Chowdhury said.
He added global fixed interest and US or global high yield funds are among the most likely candidates with another equity fund, probably a US small cap mandate, to be managed by Royce & Associates, likely to be the third new offering.
After conversion, three of Legg Mason's existing onshore funds, US Equity, European Growth and Strategic Bond, will carry two share classes. The A share, which will be common to all funds, will have a minimum investment level of £3,000, initial charge of 4.25% and pay 3% commission upfront and 0.5% trail.
The annual management charge will be standardised at 1.5% for the equity funds and 1.25% for the bond funds.
The C share class, initially just to be offered on these three funds, will be targeted at discretionary managers with a £500,000 minimum investment. Its charges are 1% initial, 1% annual and no trail.
Legg Mason's Dublin-domiciled Oeic currently houses five sub-funds. The closure of its Caribbean Oeic will see the assets from these funds merged into the Dublin counterparts where there is already overlap, but an additional five funds will also be brought over to Dublin and will be Ucits-compliant.
The funds, Euro Core Bond, Offshore Diversified Fixed Income, Emerging Markets Bond and US High Yield, managed by Western, are all fixed interest mandates apart from the Asian Dragon Portfolio, managed by Batterymarch.
The administration of these new funds will be consolidated into Cogent, which already administers the group's Dublin range. The funds being added to Dublin currently offer X shares, those which have back end rather than front end charges. Chowdhury said these are popular in Latin America, the market into which the Caribbean Oeic range was predominantly sold.
He does not expect these to be brought over to Dublin as he said he has seen little evidence they have been successful in the UK and Europe. A range of share classes aimed at investors, discretionary advisers and institutions will be offered, however.
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