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Legg Mason Inc. recently announced extensive changes to its fund lineup, with many of the moves affecting former Smith Barney funds now carrying the Legg Mason Partners name. The consolidation will reduce the number of its open-end offerings across both families to 119 from 166. Much of the reduction will be the result of fund mergers, although some offerings, such as Legg Mason Partners Real Return Strategy
We view many of these mergers as positive for shareholders, as lower-cost funds will generally acquire funds with higher expense ratios. For instance, Legg Mason Partners Aggressive Growth
That's not to say every acquiring fund has lower fees. Salomon Brothers Investors Value
In addition to fund mergers, Legg Mason plans to rebrand most of the Salomon Brothers funds and other funds formerly run by Citigroup as Legg Mason Partners Funds. The Smith Barney funds already took that label earlier this year. Legg Mason Inc. will then have four fund lines: Legg Mason Partners Funds, Legg Mason Funds, Royce Funds, and Western Funds.
That's not all. The fund company also aims to reduce the number of its governance boards from 10 to three. One board of trustees will oversee equity funds, the other fixed-income funds, and a third will keep an eye on closed-ends. This will reduce some of the confusion resulting from Legg Mason's series of recent fund family acquisitions and likely will result in continuity among offerings. Of course, we are wary of boards of trustees taking on too many funds, as we question their ability to remain actively involved with each one.
A few management changes lie in store here as well. On July 12, ClearBridge Advisors, a unit of Legg Mason Inc., announced the addition of Robert Gendelman as managing director and portfolio manager of Legg Mason Partners Capital & Income
ClearBridge also announced Brian Posner, who took over as CEO of ClearBridge Advisors in November 2005, will assume added duties as lead manager of Salomon Brothers Capital
Many of these changes (not including manager changes) require shareholder approval, so Legg Mason will be sending out one set of proxies in August and another in October.