Ethical investing on the rise to meet investor appetite

Legg Mason Martin Currie today announced that it has been awarded “Highly Recommended” 1 rating for its Ethical Income fund (the Fund) from Lonsec Research (Lonsec). Martin Currie, with over $10 billion in assets under management in Australia, is an active equities fund manager affiliate of Legg Mason.

Launched a year ago, the Fund invests in a well-diversified portfolio of Australian securities which and aims to deliver a ‘sustainable’ plus growing dividend yield greater than the broader equity market, subject to an exclusionary responsible investment screen. The Fund is managed primarily on a ‘bottom-up’ basis with a bias to quality and actively consider Environmental, Social and Governance (ESG) factors for every company invested.

The firm combines internal bottom-up ESG research conducted by the analysts with external analysis from MSCI ESG which provides an independent check on controversial issues and appropriateness of investment. The Fund’s ethical screen investigates and excludes companies including those that have business involvement by more than 5% of revenue in alcohol, adult entertainment, defence and weapons, fur, gambling, genetically modified crops, nuclear power and tobacco.

The Fund also screens for ESG impacts where most notably it does not invest in companies that generate more than 20% of total EBITDA from thermal coal power generation, or generate more than 20% of revenue from thermal coal mining.

Speaking about the Fund, Lonsec review noted; “the Fund benefits from a well-structured process and a consistently implemented philosophy specifically targeting investors with an ethical objective.”

In particular Lonsec positively viewed the experienced investment team capably led by Chief Investment Officer, Reece Birtles who “has both global and domestic equity portfolio management experience and a background covering the Financials sector.”

“The large degree of alignment across the equity portfolios, particularly the income and ethical income strategies” was an additional comfort to Lonsec.

Legg Mason Martin Currie CIO Reece Birtles said; “We are very pleased that a leading research house recognises the quality of investment processes and philosophy behind the Legg Mason Martin Currie Ethical Income Fund.”

Lonsec also noted Will Baylis, co-Portfolio Manager and backup for Birtles in this Fund, as having been “instrumental in the development and evolution of this Fund, and in tailoring the product towards a broad responsible investment audience.”

Speaking about the Fund’s performance Lonsec said; “While the Fund has not yet attained a meaningful track record due to its recent inception, Lonsec notes the Fund holds similar portfolio characteristics as the Manager’s Equity Income Trust which has outperformed its peer group and benchmark over all periods to July 2016.”

It adds; “the Fund has a differentiated income objective and may appeal to ethically motivated investors seeking lower fossil fuel exposure portfolios. While a new offering, the Manager has delivered encouraging performance outcomes in its overarching income strategy.”

Lonsec considered that Legg Mason Martin Curie’s investment style to be “primarily ‘income’ driven for this strategy, with a general bias towards higher quality stocks” and “suitable for blending with other Australian equities strategies, including growth style-biased, absolute return and small cap funds.”

Lonsec noted; “At the time of review, 15 stocks were screened out from approximately 120 of the Manager’s income universe due to breaches of the ethical charter, and while this is not insignificant, this suggests the Manager is not overly restricted in idea generation by the impact of the screen.”

Lonsec also positively viewed Legg Mason Martin Currie’s analysis on its capacity based on ownership, liquidity and alpha potential, having experienced strong growth in recent years.

-Ends –


About Legg Mason

Legg Mason is one of the world’s largest funds management groups, with a history that dates back to 1899. The firm is listed on the New York Stock Exchange and employs approximately 3,100 employees in 31 offices worldwide. One of Legg Mason’s most distinguishing characteristics is its global multi-affiliate model. Legg Mason provides a global platform and centralised business and distribution support for its nine affiliated fund managers that include: Brandywine, Clarion Partners, ClearBridge, EntrustPermal, Martin Currie, RARE (in addition to its own domestic distribution), Royce & Associates, QS Investors and Western Asset. Each affiliate operates independently under its own brand and investment process, and is considered an industry expert in its asset class. Legg Mason offers a diverse set of investment solutions across institutional, wealth management and direct investor channels, covering a range of asset classes including Australian equities, global equities, fixed income, real assets, income, alternatives, emerging markets, direct lending and multi-asset products.

Media contacts:

Simrita Virk at Shed Media

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1_The Lonsec Rating (assigned as follows: Legg Mason Martin Currie Ethical Income Fund – January 2017) presented in this document are published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421445. The Ratings are limited to “General Advice” (as defined in the Corporations Act 2001 (Cth)) and based solely on consideration of the investment merits of the financial products. Past performance information is for illustrative purposes only and is not indicative of future performance. They are not a recommendation to purchase, sell or hold Legg Mason Asset Management Australia Limited products, and you should seek independent financial advice before investing in these products. The Ratings are subject to change without notice and Lonsec assumes no obligation to update the relevant documents following publication. Lonsec receives a fee from the Fund Manager for researching the products using comprehensive and objective criteria. For further information regarding Lonsec’s Ratings methodology, please refer to our website at:

Legg Mason Asset Management Australia Limited (ABN 76 004 835 849 AFSL 240827) (Legg Mason) is part of the Legg Mason, Inc. group. Legg Mason Australia is the responsible entity of the Legg Mason Martin Currie Ethical Income Fund (ARSN 613 725 036). “Martin Currie Australia” is a division within Legg Mason Asset Management Australia Limited. A Product Disclosure Statement (PDS) is available for the Fund, and can be obtained by contacting Legg Mason Australia on 1800 679 541. Investors should obtain professional advice and read the PDS before making any investment decisions. This product has not been prepared to take into account the investment objectives, financial objectives or particular needs of any particular person. Legg Mason Australia does not guarantee any rate of return or the return of capital invested. Investments are subject to risks, including, but not limited to, possible delays in payments and loss of income or capital invested. Please obtain a copy of the PDS before making any decision to invest. Any opinions in this document are subject to change without notice and do not constitute investment advice or recommendation.


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