Legg Mason has dropped the income requirements for its Legg Mason IF Martin Currie Global Equity Income fund by abandoning a promise to yield more than its index.
As of today, the £113.7m fund, managed by Alan Porter and Mark Whitehead, would see it “target income and the potential for capital growth over the long term” instead of its current aim of “an annual yield in excess of the MSCI World index with the potential for capital appreciation”.
The move, approved by shareholders in a EGM meeting last week, reflects fund groups moving away from fixed targets giving the difficulties in finding income in current markets.
In addition, Whitehead, who joined Martin Currie as head of Income in November 2015, will also use derivatives for investment purposes as well as efficient portfolio management, the firm says.
Despite the changes in the objectives, there will be no changes to the fund’s investment process as well as the risk profile of the fund.
Legg Mason head of international product Jaspal Sagger says:“We believe that global equity markets offer investors a wealth of income opportunities that can best be captured by a flexible investment approach.
“The enhancements that we are making not only increase the fund’s ability to generate income but are also designed to allow the investment team to fully utilise the experience that Mark Whitehead has brought to Martin Currie’s investment platform.”
In August, the firm already said it will scrap the gross income yield target of 8 per cent per annum from its Legg Mason IF Brandywine Global Income Optimiser fund as managers warned the target had become “extremely difficult to achieve under current market conditions”.
The managers will not set a new yield target for the fund, but they will replace it by “generating income” for investors rather than “maximising” it.