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Legg Mason Western Asset Global Credit Absolute Return Fund
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About the Fund
Investment Aim
The Fund seeks to maximise absolute return, through income and capital appreciation, by investing at least 70% of its Net Asset Value (NAV) in a combination of investment grade and high yield (no more than 50% non-investment grade) bonds, listed or traded anywhere in the world. The Fund may use derivatives to gain short exposure to debt securities and to gain exposure to interest rates or currencies. The Fund is permitted to have a negative average duration1, with an anticipated range of between -10 and +10 years, depending on the managers’ forecast for interest rates and yields. The market risk of the Fund will be measured using the value-at-risk (“VaR”) methodology, which will not exceed 20% of the Fund’s Net Asset Value.
Performance Benchmark
BBA LIBOR USD Overnight Rate
- Seeks to maximise absolute return
- Combination of credit focus, global opportunity set, and an absolute return strategy within a UCITS structure
- Highly experienced investment team
About the Investment Strategy
- Tactical, absolute return focus
- Target return of 8-10%* per annum (over 3 years)
- Target volatility of 8-10%* per annum (target sharpe
ratio of at least 1*)
- Ability to be long and short single name CDS (to
express views on specific issuers)
- Ability to be long and short index CDS (to manage
beta)
- Ability to be long and short duration (-10 to 10 years)
- Daily liquidity
- Up to 50% in non-investment grade securities
- UCITS IV vehicle using VaR to measure and control global exposure
About the Investment Team
Founded in 1971, Western Asset has decades of experience and is now one of the world's largest managers of fixed income investments. Western Asset follows a team-focused approach comprising groups of specialists dedicated to all the major areas of the fixed income market. Its expertise extends globally across major bond markets.
Risk Factors: The value of investments and the income from them can go down as well as up, and investors may not get back the amount originally invested. Past performance is no guide to future returns and may not be repeated. This fund may invest in any number of issuers and may concentrate its assets in the securities of a small number of issuers. It may invest in non-investment
grade bonds (those rated lower than BBB), which carry a higher degree of default risk than investment grade bonds. The fund is permitted to have a negative
average weighted duration. It may invest extensively in certain types of financial derivative instruments (FDIs) for investment and/ or hedging purposes or
efficient portfolio management, the use of these instruments involve additional and higher levels of risk including but not limited to market risk, liquidity
risk, counterparty risk, and operations risk. The use of derivatives may also create leverage or synthetic short positions. Any leverage created by the use of
derivatives and synthetic short positions is subject to the Value-at-Risk (“VaR”) limit. The market risk of the Fund will be measured using the value-at-risk
(“VaR”) methodology. The absolute VaR of the Fund will not exceed 20 per cent of the Fund’s Net Asset Value. The Fund may invest up to 10 per cent of its
NAV in common stock and derivatives on equity securities. The Fund is not a complete investment programme, and there can be no assurances it will achieve
its objective. Investors should note that an investment in the Fund should not constitute a substantial proportion of an investment portfolio and may not be
appropriate for all investors. Due to the investment policy of the Fund, it may have particularly volatile performance.
* These are targets, are not guaranteed and are subject to change.
1The Fund is permitted to have a negative weighted average duration. This may result from holding certain instruments that themselves have negative duration, such as interest-only mortgage-backed securities, or through the use of financial derivative instruments.