Legg Mason IF ClearBridge US Equity Income X Hgd GBP

Large cap US equities with an income and income growth objective

  • 211.50p
    Price (Inc)

    These are the shares in the fund that pay out an income to clients. The income is made up of the total dividends – the money a company can pay out to its investors – from the companies in the fund.

  • -
    Price (Acc)

    These are the shares in the fund that don’t pay out an income to clients. Any dividends – the money a company can pay out to its investors – are reinvested into companies in the fund. Despite no income, the shares should be worth more over time. Good incentive, eh?

  • 0.00%

    Initial charge

    Some funds charge you when you first invest, which is aptly known as the initial charge. They’re usually between 3-5% but at Bestinvest, we usually don’t charge you a penny!

  • 0.75%
    Annual management charge

    This is how much the fund management company charges to run the fund. It’s like paying a babysitter, dog sitter or house sitter (that makes well-informed, heavily researched changes to improve your baby/dog/house when needed).

  • 1.13%
    Ongoing charges

    This stands for Ongoing Charges Figure. It’s the cost of running a fund and includes admin fees, manager fees, administration costs, etc.

  • 1.80%
    Yield

    How much the fund is currently paying out in income to investors. It’s NOT to be confused with the overall growth of a fund – a very different thing indeed. It’s also NOT a guarantee of future pay-outs, just a snapshot. This is more what it’s not than what it is…

Prices as at 15 January 2021

The Fund seeks to provide a high level of income with a secondary investment objective of long-term capital appreciation. Given the income generation and long-term capital appreciation objectives of the Fund, the overall objective is that of total return. Under normal market conditions, the Fund seeks to achieve its objective by investing at least 70% of its net assets in US equity or US equity related securities, which the investment manager believes have the ability to increase dividends over the long term with a view to obtaining a yield higher than the Historic

Fund summary

Sector North America
Structure OEIC
Launched October, 2011
Size £40m
Yield 1.80%
Charging basis
Dividends paid 31 Jan, 30 Apr, 31 Jul, 30 Oct

Charges

Standard initial charge 0.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 0.75%
Ongoing charges figure 1.13%

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Investment process

Idea Generation - Universe broadly defined as securities having an attractive & sustainable income stream. Ideas sourced by portfolio managers and analysts. Typically look at $3bn market cap or higher. Will look at non-equities to provide yield advantage, especially during periods of market dislocation Dividend & Valuation Analysis - Yield evaluated based on relative and absolute attractiveness. Capacity for dividend payment growth also assessed. Balance sheet strength and dividend sustainability evaluated. Strength implies investment grade rating on debt. Look for sustainably high margins and ROIC. Analyse credit statistics. Payout ratio assessed as % of Free Cash Flow Portfolio Construction & Risk Controls - Automatic review if dividend is cut/suspended. Watch list for securities with price drops.Quarterly review by independent risk committee. Incorporate top down views primarily on areas of market to avoid.

More companies the world over are realizing the importance of paying dividends and there are not yet many US equity income funds. It may be a good idea for Bestinvest clients to diversify sources of income away from the UK equities. The team on this fund have a track record of running this strategy in the US from 2008 and before this running a similar strategy but without a specific dividend requirement. The CIO Hersh Cohen has used this same investment process for 40 years. Currently the target portfolio yield is 4½% which is attractive.

Manager research

Average monthly relative returns

  • 16/17 -0.84%
  • 17/18 0.30%
  • 18/19 0.05%
  • 19/20 0.26%
  • 20/21 -0.08%

Bestinvest MRI

  • 3 years 0.08%
  • 5 years -0.06%
  • Career 0.00%
  • 3 years 68.40%
  • 5 years 54.40%
  • Career 66.30%

Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

Clearbridge Investment Team

•Harry “Hersh” Cohen, MD, Senior Portfolio Manager, CIO - 44 Years’ of investment industry experience; Joined a predecessor organisation in 1969; Member of the ClearBridge Advisors Management Committee; Member of the ClearBridge Advisors Risk Committee; PhD in Psychology from Tufts University; BA from Case Western Reserve University. •Peter Vanderlee, CFA - MD, Portfolio Manager - 14 Years’ investment industry experience; 11 Years’ related industry experience; Joined a predecessor organisation in 1999; Chairman of the ClearBridge Advisors Proxy Committee; Member of the CFA Institute; Salomon Smith Barney – First Vice President; Booz Allen & Hamilton – Program Director/Senior Associate; Cap Gemini America – Senior Consultant; MBA from New York University, Leonard N. Stern School of Business; MS in Maths/Computer Science from the University of Technology, Eindhoven, Holland. •Michael Clarfeld, CFA - MD, Portfolio Manager - 13 Years’ of investment industry experience; Joined ClearBridge in 2006; Member of the CFA Institute; Member of the New York Society of Securities Analysts; Hygrove Partners, LLC – Equity Analyst; Goldman Sachs – Equity Research, Financial Analyst; BA in History from Duke University.

Track record

Clearbridge Investment Team has 12.6 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +00%. During the worst period of relative performance (from February 2009 - February 2017) there was a decline of 29% relative to the index. The worst absolute loss has been 35%. Statistically, we estimate the probability that this fund manager is adding value, rather than being lucky, is

Periods of worst performance

Absolute -35.00% (June 2008 - February 2009)
Relative -29.00% (February 2009 - February 2017)

About the MRI

Our unique indicator: the Bestinvest Manager Record Index (MRI) measures the likelihood that the fund manager is adding value through their decisions. It is based on their performance record over the course of their career, adjusted for the amount of risk taken. MRI is an important contributor to our fund rating system but it is also vital to take account of qualitative factors. It is also very important to select funds to form a cohesive portfolio with an appropriate overall risk level.

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Top 10 holdings

Data accurate as at 31 July 2020

6.0514% Microsoft Corp
4.954% Apple Inc
3.2632% Comcast Corp(New)
2.829% Blackstone Grp Inc
2.7623% Raytheon Technologies Corp
2.7046% Nestle Sa
2.6843% Procter & Gamble Co
2.6808% American Tower Corp
2.6176% Mastercard Inc
2.5408% Linde Plc
Source: Trustnet

Sector breakdown

Information Technology 19.00%
Financials 14.00%
Health Care 12.00%
Consumer Staples 12.00%
Industrials 10.00%
Materials 9.00%
Communications 7.00%
Utilities 6.00%
Energy 5.00%
Real Estate 3.00%

Portfolio

Portfolio is split 80% core (stocks held for the long term) and 20% for short term opportunistic investments. Can use preferred shares and convertibles. Low turnover 20-40%.

Constraints

60-90 holdings. US companies >$3bn market cap. Stock positions ½% to 4%. It has no income concentration.

Key Investor Information

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