Legg Mason’s Western Asset removes tobacco, cluster munitions from bond funds

Tl;dr

  • Divestment is an investment tool that removes perceived risks from a portfolio by refraining from, or selling, assets.
  • Legg Mason, a global fund manager, will remove investments in tobacco and cluster munitions from its bond funds
  • Tobacco and cluster munitions are increasingly seen as bearing material financial risks due to social and health impact

Legg Mason’s fixed income affiliate Western Asset Management will remove investments linked to tobacco and cluster munitions from the Legg Mason Western Asset Global Bond Fund and the Legg Mason Western Asset Australian Bond Fund.

The decision to remove the affected issuers was done to ensure that the funds deliver investment solutions “that meet current and future client needs,” said Andy Sowerby, Legg Mason Australia managing director.

“We have decided to remove tobacco and cluster munitions related issuers from the funds’ investable universe. This shows our commitment towards delivering client focused investment solutions,” Sowerby said. “Investors in the Legg Mason Western Asset Global Bond Fund and the market-leading Legg Mason Western Asset Australian Bond Fund can be assured that going forward neither fund will ever hold assets in these controversial areas.”

Western Asset Management has funds under management of $565 billion. The Legg Mason Western Asset Global Bond Fund has more than $563 million in funds under management in Australia, and offers investors exposure to an actively managed global bond fund, benchmarked to the Bloomberg Barclays Global Aggregate Index, according to Legg Mason.

Western Asset Management has $56 billion in funds under management in Australia, and $982 billion globally, as of the end of 2017.

Legg Mason’s 2017 Corporate Social Responsibility Report reported that that US$159 billion of its assets under management – around 25% of funds under management – is invested in ESG products and strategies.

Eight of the nine Legg Mason affiliates are signatories of the United Nations-supported Principles of Responsible Investing

In 2016, Legg Mason received an A rating from not-for-profit Carbon Disclosure Project for its commitment to climate disclosure and overall climate performance. Legg Mason has been reporting to CDP since 2008.