Legg Mason Launches Fixed Income Fund of Hedge Funds

Published on Wednesday, 01 February 2012 11:11 Written by TradersHuddle Staff

Permal Hedge Strategies Fund to launch on February 1

NEW YORK, Feb. 1, 2012 /PRNewswire/ -- Legg Mason Global Asset Management has launched Permal Hedge Strategies Fund ('the Fund'), a fixed income focused multi-manager, multi strategy fund of hedge funds, on February 1, 2012. 

The Fund invests in a broad range of fixed income strategies, employing flexible asset allocation and moving capital between credit and non credit strategies. Investments include developed as well as emerging market fixed income and long/short fixed income.  There are also smaller allocations to event-driven strategies, such as risk arbitrage, distressed debt, special situations and activists, as well as global macro strategies, including both systematic and discretionary managers, which are intended to mitigate market volatility.[1] 

"Given market volatility and investor demand for lower risk products, we have seen more desire for lower correlated, alternative investment strategies.  We worked collaboratively to bring to market a product that would not only fit investors needs and  would bring Permal's expertise as one of the oldest fund of hedge funds to the retail market," stated Matt Schiffman, Head of Global Marketing for Legg Mason.  He continued, "The fund is designed to take Permal's existing product range and add increased liquidity and transparency through a publicly traded offering."

Javier Dyer, Portfolio Manager of Permal Hedge Strategies Fund and Permal Group Deputy Chief Investment Officer, added: "With corporate activity likely to increase throughout 2012, we believe that this is a good area to be in.  We expect to see corporate restructurings, both inside and outside of bankruptcy, and distressed credit opportunities. Currently there are late-stage bankruptcy situations that are offering attractive IRRs for what are effectively liquidation situations.  Elsewhere, with many loan and bond re-financings still due for renewal in 2013 and 2014, we again expect multiple long, short and distressed opportunities, with capital markets asserting greater discipline in differentiating between the good and bad credits. Outside of corporate credit, we like non-agency RMBS, with many securities offering significantly higher cash yields than corporate bonds."

The Fund, which is registered under both the Securities Act of 1933 and Investment Company Act of 1940, is managed by Legg Mason Partners and sub-advised by Permal Asset Management Inc., a member of Permal Group ('Permal'), the $20 billion alternative investment manager.  It has been structured to provide investors with 1099 tax reporting and will be available to U.S. accredited investors. The minimum investment is $25,000 and liquidity is quarterly[2].

Permal Hedge Strategies Fund has a high degree of overlap with a flagship Permal fixed income fund and invests in 20 to 40 underlying hedge funds. 

[1] [Any descriptions or information involving investment process or strategies is provided for illustration purposes only, may not be fully indicative of any present or future investments, may be changed at the discretion of the investment manager (subject to any applicable limitations contained in the Fund's prospectus) and are not intended to reflect performance.]

[2] Repurchases will be made at such times, in such amounts, and on such terms as may be determined by the Fund's Board of Trustees, in its sole discretion. Legg Mason and Permal believe that the Fund will ordinarily offer to repurchase shares from Fund shareholders on a quarterly basis.

About Legg Mason

Legg Mason is a global asset management firm, with $627 billion in assets under management as of December 31, 2011.  The Company provides active asset management in many major investment centers throughout the world. Legg Mason is headquartered in Baltimore, Maryland, and its common stock is listed on the New York Stock Exchange (symbol: LM).

About Permal

Permal Group is one of the oldest and largest alternative asset management firms in the world, offering customized portfolios and a wide range of multi-manager and multi-strategy funds to institutions and individual investors. Permal's value added is derived from its well-honed manager selection and risk management processes, a leading separately managed account platform, enhanced product engineering and asset allocation, combined with top-down views. Permal has nine offices, over 200 employees, and extensive networks around the globe.

The views expressed are as of the date indicated, are subject to change, and may differ from the views of other portfolio managers or the firm as a whole. These opinions are not intended to be a forecast of future events, a guarantee of future results, or investment advice. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies should consult their financial professional.

All investments are subject to risk, including the possible loss of principal. The Fund is a newly organized, open-end investment company with a limited history of operations. In addition to the Fund's operating expenses, you will indirectly bear the operating expenses of the underlying funds. The Fund may invest in unregistered hedge funds which are highly speculative investments that employ aggressive investment strategies and carry substantial risk. Investments in hedge funds are generally illiquid, difficult to value and may carry significant restrictions for transferring assets. Some of the underlying funds employ leverage, which increases the volatility of investment returns and subjects the Fund to magnified losses if an underlying fund's investments decline in value. The Fund and some of the underlying funds may use derivatives, such as options and futures, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on Fund performance. Some of the underlying funds may employ short selling, a speculative strategy. Unlike the possible loss on a security that is purchased, there is no limit on the amount of loss on an appreciating security that is sold short. The Fund and each underlying fund may engage in active and frequent trading, resulting in higher portfolio turnover and transaction costs. There is no assurance that these and other strategies used by the Fund or underlying funds will be successful. Equity securities are subject to price fluctuation. International investments are subject to special risks including currency fluctuations, social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets. Small-and mid-cap stocks involve greater risks and volatility than large-cap stocks. Fixed income securities involve interest rate, credit, inflation, and reinvestment risks. As interest rates rise, the value of fixed income securities fall. High-yield bonds possess greater price volatility, illiquidity, and possibility of default. Please see the prospectus for a more complete discussion of the Fund's risks.

Because the Fund invests in underlying Portfolio Funds, the managers may not be able to shift allocations in time to capture an immediate or sudden spike in the market. Diversification does not guarantee a profit or protect against a loss.

An investment in the Fund is relatively illiquid and should be considered speculative.

Eligible Investors: U.S. Accredited Investors. If an individual: persons with individual income in excess of $200,000 or joint income with spouse of $300,000, or net worth of at least $ 1 million. Available to tax exempts including IRAs.

Before investing, carefully consider a fund's investment objectives, risks, charges and expenses. You can find this and other information in each prospectus, which is available at www.leggmason.com/individualinvestors. Please read it carefully.

©2012 Legg Mason Investor Services, LLC, member SIPC. Permal Group and Legg Mason Investor Services, LLC are Legg Mason, Inc. subsidiaries.

INVESTMENT PRODUCTS: NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE

SOURCE Legg Mason