Bloomberg News

Western Asset Funds to Drop Legg Mason Name in Sales Push

May 31, 2012

Legg Mason Inc. (LM:US), the money manager with 18 straight quarters of redemptions, said U.S mutual funds run by its Western Asset Management Co. unit will shed the name of the parent company as it seeks to boost sales to individual investors.

The funds will only use the Western Asset name as part of a rebranding effective Aug. 1, according to filings the Baltimore- based firm made today with the U.S. Securities and Exchange Commission. Legg Mason decided to make the switch as part of a broader strategy to make the funds more competitive, according to Maria Rosati, a spokeswoman for Legg Mason.

“We’re just really trying to make sure that the reputation and the satisfaction that we’ve delivered to our institutional clients is easily transferred to the retail clients,” Jim Flick, director of global client service and marketing of the bond division, said in a telephone interview. By using the Western Asset name, “we will be able to showcase our capabilities to a broader audience.”

Western Asset, Legg Mason’s largest investment unit, is trying to stand out as performance at its funds has rebounded since the 2008 financial crisis and its corporate parent is seeking to improve results at other investment affiliates. Nelson Peltz, the activist investor who joined Legg Mason’s board in October 2009 after investor redemptions and losses related to its money funds had sent the stock tumbling 63 percent in the prior two years, said last year that he expected Western Asset to lead the firm’s turnaround.

The unit had about $447 billion in assets as of March 31.

Core Plus

The $9.4 billion Western Asset Core Plus Bond Fund (WACPX:US) has returned 3.8 percent this year, beating 86 percent of competing fixed-income funds, according to data compiled by Bloomberg.

Legg Mason’s assets declined 5.1 percent this year as of March 30 compared with a year earlier to $643.3 billion. Bond assets, managed mostly by the Western Asset unit, fell 0.1 percent to $356.1 billion, the firm said. Legg Mason’s investors pulled $2.8 billion from bond funds and $4.9 billion from stocks during the first quarter while depositing $2.8 billion into Legg Mason’s money funds.

Last quarter the firm completed a plan designed to save $130 million to $150 million a year through a combination of job cuts and moving certain technology functions to investment units.

Cutting Costs

Legg Mason is still looking for ways to cut costs and the changes to the Western Asset funds are partially driven by a desire to make the firm as efficient as possible and to streamline redundancies, said Macrae Sykes, an analyst with Gabelli & Co. in Rye, New York. Gabelli and its affiliates own about 3.4 percent of Legg Mason’s shares.

Other changes to the funds managed by Western Asset include adding more share classes and modifying investment strategies, steps that are likely to be completed by October, Flick said.

Legg Mason’s affiliates, which include stock-fund managers Royce & Associates and ClearBridge Advisors, have autonomy over investment decisions while relying on the corporate parent for strategic advice and sales support.

To contact the reporter on this story: Alexis Leondis in New York at aleondis@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net


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Companies Mentioned

  • LM
    (Legg Mason Inc)
    • $56.75 USD
    • 0.07
    • 0.12%
  • WACPX
    (Western Asset Core Plus Bond Fund)
    • $11.67 USD
    • 0.01
    • 0.09%
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