American giant has the legs to run

The managing director of international distribution at Legg Mason says the firm intends to raise its profile in British markets and grow with more acquisitions, writes Will Jackson.

On the equity side of the Legg Mason range, Potter also has exposure to Nordea North American Value, a Luxembourg-domiciled fund run by Gregg Powers at Private Capital Management – a Florida-based subsidiary. The $460m portfolio was launched in 1997 and held over a third of its assets in technology stocks at the end of November, including positions in Motorola, Symantec and Hewlett-Packard.

Potter’s final Legg Mason holding is the Dublin-domiciled US High Yield fund managed by Western. The $125m bond fund, which features in the £260m Thames River Distribution portfolio, returned 18% over the past year, beating the Morningstar “USD High Yield Bond” sector by one percentage point.

“Legg Mason have got a wealth of funds and opportunities at their disposal, and it’s a question of picking through which ones you want,” he adds. “They’ve certainly got good bond capability and the US side of the business is probably on the recovery path.”

On product launches, Johnson says Legg Mason is likely to continue expanding both its offshore and onshore ranges, depending on which buyer base it is targeting. Alongside the European absolute return bond portfolio, proposed launches include Asian bond, global socially-responsible investment and American large cap funds – for Western, Global Currents and Batterymarch respectively. “We put placeholders in our prospectus for products that we may incubate at a later date,” he says.

Developing products and broadening the investor base are key priorities for Johnson in Britain this year. Another is increasing brand awareness.

Johnson says Legg Mason has made significant progress in raising its profile. However, the firm remains “one of the best kept secrets in international markets”, he adds, and resources will be made available for targeted marketing and public relations campaigns.

The biggest change in 2011 could be related to Johnson’s fourth priority area – acquisitions. Since Legg Mason was founded in 1899, the company has grown by buying businesses.

Over the past 25 years it acquired several specialist managers, including Batterymarch, Brandywine Global, Permal, Private Capital Management, Royce and Western – all of which continue to operate as independent subsidiaries.

Johnson, who joined Legg Mason following its purchase of Citigroup Asset Management in December 2005, says the group aims to increase its coverage of British and continental European equities in particular.

“We have 12 excellent managers within our stall but we will continue to focus on identifying top-quality managers to build out our product suite,” he says.

“So we will continue to look at opportunities. Finding the right opportunity may be difficult. But we are interested in acquiring top-tier managers in key asset classes where we think we can augment our capability.”