Legg Mason puts its trust in value
Reece Birtles
The current market environment presents strong performance prospects for the newly-launched Legg Mason Australian Value Trust, according to Legg Mason Asset Management Australia head of Australian equities Reece Birtles.
This statement is based on the belief that an intrinsic value investment philosophy, which the trust’s analyst team adopts in its research, is the most persuasive anomaly.
Legg Mason’s approach to value investment is based on fundamental research, a concentrated portfolio, low turnover, disciplined decision making and active risk control.
“Value as an approach is one of the strongest alpha signals you can get across the market in most market environments globally,” Birtles said.
“It has had a relatively weak three year period of performance, and as a result you are seeing significant spreads in valuations between cheaper companies and expensive companies, so the opportunities in terms of timing to take advantage of this sort of product are very strong.”
Birtles said the trust would take significant positions in attractive dividend discount model (DDM) stocks with low turnover.
Legg Mason’s DDM is the framework used to consistently rank, evaluate and communicate forecasts of company-specific fundamentals and risks.
As a valuation tool, the model is based on long-term forecasts of a firm’s fundamentals and is believed to deliver consistent comparisons across companies, industries, borders and capitalisation.
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