Traditional mutual fund players like Legg Mason are seeing ETFs as a natural opportunity to share their research and investment strategies with a wider audience.
“We view the ETF wrapper is just that – it’s a wrapper, and if we compare an ETF with a mutual fund, we find much more in common than there are differences. So they’re both open-ended products, both subjected to rules and regulations under the ’40 Act, both create and redeem shares at the end of the day at NAV. It’s just that we find the ETF wrapper cheaper and more tax efficient,” Tim Gilligan, ETF Product Specialist for Legg Mason, said at the Inside ETFs 2018 conference.
Consequently, Legg Mason has reached across its affiliates to tap their best strategies and bring those investment themes to market in an ETF wrapper.
For example, through a partnership with QS Investors, Legg Mason has launched a number of strategies that incorporate a top-down approach to help balance risk and to deliver broad market exposure. QS Investors has provided custom solutions for institutional and pension funds for 15 years. The Legg Mason Emerging Markets Diversified Core ETF (NasdaqGM: EDBI), Legg Mason Developed Ex-US Diversified Core ETF (NasdaqGM: DDBI) and Legg Mason US Diversified Core ETF (NasdaqGM: UDBI) all follow QS Investors’ proprietary Diversification Based Investing (DBI) rules-based methodology.