Legg Mason to close three exchange-traded funds

Legg Mason announced Wednesday that it would liquidate and close three small exchange-traded funds.
The closings come after the Baltimore-based investment management firm reported a big loss for its fiscal third quarter and the launch of a cost-cutting plan that would consolidate and automate operational functions among its affiliates.

Legg said it was closing the funds “based on an ongoing review of its product lineup and to ensure it meets the evolving needs of its clients.”

The funds Legg plans to close include:

• Developed ex-US Diversified Core ETF, 
• Emerging Markets Diversified Core ETF and 
• US Diversified Core ETF. 

Exchange-traded funds are investment funds like mutual funds but shares can be traded on a stock exchange — the Nasdaq market in the case of these three Legg funds.

The Developed ex-US Diversified Core fund had just $10.7 million in assets under management. The Emerging Markets Diversified Core fund had $14.6 million in assets., while the US Diversified Core fund had less than $3.1 million in assets.

All three funds will stop accepting new orders on March 6 and are expected to stop trading on March 15. Proceeds from the liquidation are expected to be sent to shareholders on March 22.

Legg Mason remains heavily vested in exchange traded funds with more than $800 million in such funds as of Jan. 31. The company had $727.2 billion in assets under management as of December 31.

Legg Mason Applies to Run Exchange-Traded Funds for First Time

(Bloomberg) -- Legg Mason Inc. applied to run actively managed exchange-traded funds for the first time in its 27-year-history as a public company, seeking to capture a slice of the asset-management industry’s fastest-growing segment.

Baltimore-based Legg Mason filed an application with the U.S. Securities and Exchange Commission yesterday. The application may take months to complete and the company has yet to decide on a specific strategy for the first ETF it markets to investors, Mary Athridge, a spokeswoman for Legg Mason, said in an interview today.

“We are not looking to clone products” such as the Legg Mason Capital Management Value Trust run by Bill Miller, she said. The company is considering fixed income and equity strategies for ETFs, she said.
Legg Mason’s application follows a similar move by Baltimore rival T. Rowe Price Group Inc., which filed an ETF application in December. ETFs are the fastest-growing segment of the asset-management industry, with assets soaring more than 10- fold in the past decade, compared with a doubling of assets in mutual funds, according to data from the Investment Company Institute in Washington.

Unlike traditional mutual funds, which are priced at the end of each day and report their holdings quarterly, ETFs trade on an exchange and are required to reveal the securities they own on a daily basis. Most ETFs are passively managed, like the SPDR Trust that tracks the Standard & Poor’s 500 Index of large U.S. stocks.

Industry Leader

BlackRock Inc. became the industry leader with $495.5 billion in ETF assets after acquiring Barclays Global Investors from Barclays Plc in December.

ETFs assets in the U.S. surged 46 percent to $777.1 billion last year, driven by $116.5 billion in sales, data from Washington-based ICI show. Investors pulled $8.8 billion from stock mutual funds in the U.S. in 2009 after withdrawing a record $233.8 billion in 2008.

Legg Mason had $679 billion in assets under management as of Jan. 31. The company has ClearBridge Advisors LLC, Western Asset Management Co. and Royce Management Co. as affiliates.
Legg Mason declined 28 cents to $25.72 at 12:47 p.m. in New York Stock Exchange composite trading. The stock has doubled from a year earlier.