Seeking income, building growth

After a decade of record monetary stimulus from central banks, global growth seems to be picking up and the US Federal Reserve has started hiking interest rates. Some asset prices may re-rate as rates normalise, leading to greater volatility. This makes active asset management even more crucial.
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The reality we face today

The 2017 Legg Mason Global Investment Survey has revealed that Asian investors’ reliance on cash has led to a shortfall in income producing investments while unrealistic expectations on required savings means most have not yet saved enough for a comfortable retirement.

Asian investors

Coupled with MACROS CHALLENGES

Macro Challenges
  • Central banks started to normalise rates
  • Fed intention to shrink the balance sheet
  • Re-emergence of inflation
  • Policy-related concerns

THAT contributed to the economic uncertainty in recent years

At Legg Mason, we recognise the increasing need to invest differently to bridge the gap in meeting our financial goals.

Using an Income and Growth Approach

We believe benefits of using an INCOME AND GROWTH approach include:

Icon Enhance long-term total returns +

Both coupon income and equity dividends are an important contributor to total returns.

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Icon Invest beyond traditional income tools +

Investing beyond traditional income tools can help to capture higher yields and returns.

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Icon Smooth out fluctuations and defend portfolio returns +

Limiting portfolio downside through a low volatility strategy plays a key role in helping achieve higher long terms returns

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Icon HEDGE against rising rates +

Companies such as Real Estate Investment Trust (REITs) or infrastructure businesses generally pass price increases onto their customers when rates increase, providing protection in a rising rate environment.


Diversity and Enhance Portfolio Outcome

In pursuit of this dual approach, we believe it diversifies and enhances total return as compared to a traditional fixed income or equity portfolio.



Cumulative portfolio returns over 15 years7 (2002 to 2016)

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Legg Mason income and growth solutions

At Legg Mason, we offer a range of actively managed global solutions from our specialist investment managers.

1 Source: Legg Mason Global Investment Survey 2017, based on total respondents in Asia excluding Japan who have indicated “to have enough money so that I can maintain my pre-retirement standard of living” as a retirement goal.
2 Source Bloomberg Barclays and Bloomberg, as at 31 August 2017. All Bloomberg Barclays indices are value unhedged (USD). Period from December 1998 shows how the assets have performed post the Asian Financial Crisis. EM Hard Currency = Bloomberg Barclays EM Hard Currency Aggregate Total Return Index; US Treasury = Bloomberg Barclays US Treasury Total Return Index; Global High Yield = Bloomberg Barclays Global High Yield Total Return Index; US Credit = Bloomberg Barclays US Credit Total Return Index; EM Asia Local Currency = Bloomberg Barclays EM Local Currency Universal Asia Total Return Index; China Equities = Shanghai Stock Exchange Composite Index (RMB); US Equities = S&P 500 Index; Japanese Equities = Nikkei 225 Index (JPY); Asia Pacific ex Japan Equities= MSCI AC Asia Pacific ex Japan Index (USD); European Equities = MSCI Europe Net Index (EUR). Past performance is no guarantee of future results. Indexes are unmanaged, and not available for direct investment. Index returns do not include fees or sales charges. This information is provided for illustrative purposes only and does not reflect the performance of an actual investment. EM = Emerging Markets. * Index was incepted from 2008, thus return period is from 31 December 2008 to 31 August 2017.
3 Source: Bloomberg and Markit iBoxx, as at 31 August 2017. Yields on equity indices based on gross dividend per share amounts that have gone ex-dividend over the prior 12 months, divided by the current stock price. Asian Local Currency Bonds = Markit iBoxx Asian Local Bond Index; Global High Yield Bonds = Bloomberg Barclays Global High Yield Total Return Index Value Unhedged (USD); Emerging Markets Bonds = JPMorgan EMBI Global Diversified Composite Index; Global Bonds = Bloomberg Barclays Global Aggregate Index Value Unhedged (USD); Global Government Bonds = Bloomberg Barclays Global Treasury Index Value Unhedged (USD); Global REITs = FTSE NAREIT Global REITs Total Return Index; Global Infrastructure Equities = S&P Global Infrastructure Net Index; Asia Pacific ex Japan MV Equities = MSCI AC Asia Pacific ex Japan Minimum Volatility Optimised Net Index (USD); US Equities = S&P 500 Net Index; Global Equities = MSCI AC World Net Index. Past performance is no guarantee of future results. Indexes are unmanaged, and not available for direct investment. Index returns do not include fees or sales charges. This information is provided for illustrative purposes only and does not reflect the performance of an actual investment.
4 Source: Bloomberg, as at 31 August 2017, based on month end index returns. Ann.= Annualised. Past performance is no guarantee of future results. Indexes are unmanaged, and not available for direct investment. Index returns do not include fees or sales charges. This information is provided for illustrative purposes only and does not reflect the performance of an actual investment.
5 Low Volatility Strategy: MSCI AC Asia Pacific ex Japan Minimum Volatility Optimised Net Index (USD).
6 Traditional Strategy: MSCI AC Asia Pacific ex Japan Net Index (USD).
7 Source: Bloomberg, as at 31 December 2016. Based on total returns from the different asset classes over the period 31 December 2001 to 31 December 2016. For illustration only and not representative of an actual portfolio. Past performance is no guarantee of future results. Indexes are unmanaged, and not available for direct investment. Index returns do not include fees or sales charges. This information is provided for illustrative purposes only and does not reflect the performance of an actual investment. Global Equities = MSCI AC World Net Index; Asia Pacific ex Japan Equities= MSCI AC Asia Pacific ex Japan Net Index; Asia Pacific ex Japan MV Equities = MSCI AC Asia Pacific ex Japan Minimum Volatility Optimised Net Index (USD); Emerging Markets Bonds = JPMorgan EMBI Global Diversified Composite Index; Global Infrastructure Equities = S&P Global Infrastructure Net Index.

Source: Legg Mason. This document, provided by Legg Mason Asset Management Singapore Pte. Limited (“Legg Mason”) (Registration Number (UEN): 200007942R), is for information only and does not constitute an offer or solicitation to buy or sell any units in any fund.
The mention of any individual securities / funds should neither constitute nor be construed as a recommendation to purchase or sell securities, and the information provided regarding such individual securities / funds is not a sufficient basis upon which to make an investment decision. Portfolio allocations, holdings and characteristics are subject to change at any time. Legg Mason, its affiliates, officers or directors, may have an interest in the acquisition or disposal of the securities mentioned herein.
The views expressed are opinions of the portfolio managers as of the date of this document and are subject to change based on market and other conditions and may differ from other portfolio managers or of the firm as a whole. These opinions are not intended to be a forecast of future events, a guarantee of future results or investment advice.
Although information has been obtained from sources that Legg Mason believes to be reliable, no guarantee can be given as to its accuracy and such information may be incomplete or condensed and may be subject to change at any time without notice.
Neither Legg Mason nor any officer or employee of Legg Mason accepts any liability whatsoever for any loss arising from any use of this document or its contents. This document may not be reproduced, distributed or published without prior written permission from Legg Mason. Distribution of this document may be restricted in certain jurisdictions. Any persons coming into possession of this document should seek advice for details of, and observe, such restrictions (if any).

 
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