Is 'Legg Mason' about to disappear?

Subsidiaries shake-up could mean time is running out for the storied mutual fund brand

Jan 16, 2013 @ 2:35 pm

By Jason Kephart

Time may be running out for Legg Mason, at least as a mutual fund brand name. Legg Mason Capital Management, which became a household name in the 1990s thanks to star manager Bill Miller's 15-year streak of beating the S&P 500, is merging into fellow Legg Mason Inc. subsidiary ClearBridge Advisors LLC, the company announced.

“With approximately $60 billion in assets under management, ClearBridge provides a robust business platform that will afford operating efficiencies and allow LMCM's investment professionals to focus solely on providing high-quality investment management and generating strong performance for clients,” Legg spokeswoman Mary Athridge said in a statement.

The in-house merger is the company's first major move since Mark Fetting departed as chief executive last year. At the time of his departure, there was speculation that a spinoff of sale of one ore more subsidiaries could be in the works.. Legg Mason Inc. also oversees Western Asset Management Co. Ltd., Royce & Associates LLC and The Permal Group.

Ms. Athridge said the parent company will be keeping both the Legg Mason and ClearBridge brand names for now, but the situation is under evaluation.

If the firm chooses to drop the Legg Mason name from its mutual funds, it won't be the first time. Western Asset dropped its parent company's name from its mutual funds last spring.

One reason the firm could have for shying away from the Legg Mason name, which is synonymous with Mr. Miller, is to get away from the brand's poor performance since his famed streak was snapped. Mr. Miller's Legg Mason Capital Management Value Fund lost 36% from 2006 to 2011, almost 50 percentage points worse than the S&P 500 over the same time.

Last May, Mr. Miller stepped down from day-to-day management of the fund, which had fallen to $2.5 billion in assets from a peak of $12.5 billion in 1999. The reins were handed to chief investment officer Sam Peters, but he's been unable to stage a turnaround, said Bridget Hughes, a mutual fund analyst at Morningstar Inc.

“Under new management and with a few tweaks to portfolio construction that suggested some moderation to the fund's wild ways, a turnaround has simply failed to materialize,” she wrote in an analyst report in November.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

INTV

Here's how we came up with our list of undiscovered talent in mutual funds

Senior columnist John Waggoner talks with assistant managing editor Susan Kelly about how hard work, curiosity and passion landed some fund managers on our list.

Latest news & opinion

SEC advice rule hearing updates

Commission says a lot of work ahead, public will have 90 days to comment.

SEC advice proposal unveiling: Here's what to expect

Chairman Jay Clayton will initiate momentous action Wednesday, as the commission meets to debate a rule on broker and adviser standards.

How active are the largest actively managed funds?

Active-share measures for the 15 largest actively traded mutual funds.

Morgan Stanley's success looks long in the tooth to analyst

Sanford C. Bernstein & Co. analyst Christian Bolu, concerned over stalled adviser growth and what it means for lending and deposit growth, believes the stock will "under perform."

Retirement coverage gap, 401(k) rollovers are big emerging threats for plan advisers

Proliferation of state retirement programs approaching the 'tipping point' where it will lead the federal government to step in.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print