Repeatable behaviour defines success

Having a foot in the local market and offshore has allowed Legg Mason to leverage off a long track record and reposition itself for the current and next wave of investors.

Annalisa Clark, head of Legg Mason Australia, is very clear as to why the group won the 2015 Money Management Fund Manager of the Year Award ascribing the win to ‘repeatably'.

While Clark is aware this means strong outperformance year-on year, her view extends to meeting the needs of Legg Mason's clients via investment returns as well as the product set it offers to a changing and evolving demographic.

Clark believes that Legg Mason understands the local mindset and investment needs, calling the group a ‘glocal' and drawing on the fact that it has operated in Australia since 1954, albeit under other names, before rebranding as Legg Mason ten years ago.

"Our focus over the past few years has been building and rebuilding our channels, listening to our clients and creating products to fit into the growing post-retirement space," Clark said.

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"The award was a pivotal moment for us as it was recognition of how far we have come in building those foundations, so we can repeat what we have done already and continue to be involved in this market."

According to Clark, that involvement has been on the institutional side of the market for many years which is reflected in its funds under management figures of $30 billion for institutional business and $1.3 billion for retail business.

While the latter business starts to grow, Clark is finding there is less need to explain to people who Legg Mason is and what it does in financial services but she still emphasises its local and international capabilities and the fact that Legg Mason sank roots into the Australian market instead of using it as a shop-front.

"We are fully committed to being on the ground in Australia while also being able to bring infrastructure and products in from overseas operations. As such we are a full service fund manager compared with some global asset managers who have a front office for sales without an equivalent back office," Clark said.

"The fact that we are the local responsible entity for our funds demonstrates our commitment to this market. There are US managers who see the headline numbers in Australia and are attracted but once they examine the local market they discover it was not the fat wallet they first thought."

Clark also said the Australian market has its own peculiarities that shape and alter the wider asset management changes that are taking place around the world.

A case in point is progression of ‘baby boomers' into retirement and their needs for investment products to generate growth in capital and income. While this is not limited to Australia, Clark says our superannuation system has already shaped the focus of investors and how they want their needs to be met.

"An issue I have to explain to my US counterparts is that we have a system that will provide retirement income through self-directed and controlled superannuation schemes, and this market is very fragmented," Clark said.

"While we agree that choice and control is a good thing in self-managed superannuation, the asset make-up of Australian equities, property and cash is creating inadvertent risk within portfolios."

Clark said she does not believe this is an unusual area of interest for a major fund manager, and it had identified the need to provide investments suited to the post-retirement sector back in 2010 and has been involved in education ever since.

"We feel this commitment to investor education is something that should be shared by all the players in the market, and early on, we engaged with the SMSF Association to do so as we were seeing people leaving traditional fund managers in droves," Clark said.

"Our approach is not to be like financial planners but to assist them and show people that their portfolios as they stand can often be complimented by the inclusion of other suitable investment vehicles."

Given the current wave of boomers retiring is still yet to completely wash through, Clark said Legg Mason has plenty to add but is looking at how to engage the next generation — X and Y — long before they contemplate retirement.

"The next big trend will be looking at the other end of the life cycle and trying to engage further with Generation X and Y. The fund manager that does that well will be positioned for growth but it means moving their thinking from now to tomorrow."

Legg Mason Australia

Year manager was founded: 1954 (1899 in US)

Employees: 39 in Australia (3000 globally)

Key Personnel

• Managing Director: Annalisa Clark, Head of Legg Mason Australia
• Chief Investment Officer: Reece Birtles - Martin Currie Australia, Anthony Kirkham - Western Asset Management

Funds Under Management: $1.3 billion – retail, $30 billion ($US700 billion)

Asset Classes covered: Australian and global equities, emerging markets, fixed income, A-REITs, alternatives,

Leading funds:

Legg Mason Martin Currie Real Income Fund

• Minimum investment: $30,000
• Fees/ICR: 0.75%
• Performance for year to end of May: 26.9%

Legg Mason Western Asset Australian Bond Trust

• Minimum investment: $30,000
• Fees/ICR: 0.386%
• Performance for year to end of May: 7.4%

Legg Mason Brandywine Global Opportunistic Fixed Income Trust

• Minimum investment: $30,000
• Fees/ICR: 0.714%
• Performance for year to end of May: 10.3%

Research house ratings for funds: Lonsec, Zenith

Major platforms through which funds are is available: BT Asgard, AMP, IOOF, NetWealth, MLC Navigator, NetWealth, OneVue, HUB 24,Mfunds, SIV