Legg Mason Enters ETF Arena With Four Funds

Legg Mason Inc. LM, the Baltimore-based asset manager, finally joined the fast-growing exchange traded funds industry Tuesday with the launch of four ETFs. The Legg Mason, which trade under that brand, were launched in partnership with the firm's investment affiliate QS Investors.

“Three of the new funds take a macro approach to building portfolios and balancing risk to deliver broad market exposure that can complement core portfolios.  Based upon QS Investors' proprietary rules-based methodology, Diversification Based Investing (DBI), the new funds are predicated on the understanding that capitalization-weighted indices are not balanced across opportunities and risks in the market place.  Better diversification across macro exposures, like geography and economic sector can improve risk/return characteristics and mitigate unintended bets and therefore potentially lower drawdowns during macro-economic events,” said Legg Mason in a statement. 

Legg Mason's first ETFs are the Legg Mason Developed ex-US Diversified Core ETF DDBI, Legg Mason Emerging Markets Diversified Core ETF EDBI, Legg Mason US Diversified Core ETF UDBI and the Legg Mason Low Volatility High Dividend ETF LVHD.

The Legg Mason Low Volatility High Dividend ETF is “focused on income, risk mitigation and capital appreciation.  It is based upon the idea that a stock's ability to sustain a strong dividend payout is often associated with lower volatility, making these two characteristics complementary.  Using a disciplined, rules-based methodology, the fund will screen for stocks with the potential for sustainable high dividends, while simultaneously screening out historically volatile stocks in the market,” according to Legg Mason.

LVHD, which charges 0.3 percent per year, devotes no more than 2.7 percent of its weight to any of its holdings. The new ETF's components include Wal-Mart Stores Inc. WMT, Coca-Cola Co. KO and General Mills Inc. GIS.

The Legg Mason US Diversified Core ETF, which also charges 0.3 percent per year, does not allocate more than 2.1 percent of its weight to its equity holdings. That ETF holds familiar names such as Coca-Cola, Apple Inc. AAPL and Amazon.com Inc. AMZN.

The Legg Mason Developed ex-US Diversified Core ETF is a healthcare-heavy international ETF focusing on developed markets equities. DDBI charges 0.4 percent per year and holds U.S.-listed stocks such as Teva Pharmaceuticals Ltd. TEVA and Valeant Pharmaceuticals VRX.

The Legg Mason Emerging Markets Diversified Core ETF, which charges 0.5 percent annually, features exposure to Chinese, Colombian, Malaysian and Turkish stocks, among others.

Legg Mason said it could roll out more ETFs in the coming months.