Legg Mason eyes Japan, gold and bonds

Legg Mason’s global macro investment managers have identified opportunities in Japanese equities, gold, investment grade corporate bonds and short-dated Government bonds.

It stated that this multi-asset investment style is available through its Legg Mason Permal Global Absolute Return Trust, which was recently awarded a four-star rating by Standard & Poor’s.

Legg Mason investment director, Ajay Dayal, said his firm had identified notable opportunities over the next three to six months.

“Japan is a key active equity market for us right now,” he said. “We don’t believe the market has rewarded the strong company profits, so about 7 per cent of the fund is invested in this market to capture the expected resurgence.”

He added that based on the belief that interest rates in US and Europe would not rise as fast as the market anticipated, the trust was buying short-dated government bonds that were pricing in higher rates. They also were attracted to the wealth retention of gold in light of rising sovereign debt.

“We believe gold is in a long-term bull cycle given the current and expected global dynamics and the price will remain strong for quite a while. For this reason we think it’s a good safe haven asset against the prospect of devaluing paper currencies,” said Dayal.

Corporate cost-cutting and rising revenue streams were producing higher profits and hence Legg Mason also saw value in investment-grade corporate bonds, he added.