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A Rating Upgrade as Legg Mason Mends

We've raised Legg's Parent rating to Positive from Neutral following improvements to its affiliate portfolio, but challenges do remain.

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Legg Mason operates a multiaffiliate model, in which the parent company handles distribution and marketing while affiliates--all owned by Legg Mason--operate with a fair amount of autonomy on the investment side. The firm has been on the mend since its poor showing during the financial crisis of 2007-09, making several changes to its leadership team and its affiliate portfolio.

There are now nine affiliates, down from more than a dozen a few years ago, including Western Asset, a major fixed-income player traditionally focused on credit, and ClearBridge Investments, a quality-driven fundamental equity shop. Other prominent affiliates include Royce & Associates, a specialty small-cap equity player, and Brandywine Global, a global fixed-income and equity firm. Western Asset, ClearBridge, Royce, and Brandywine Global account for more than 85% of Legg Mason’s assets under management, and all have strong investment cultures and stick to their areas of expertise.

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Andrew Daniels does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.