Daily ETF Watch: Legg Mason To Debut Funds

Mutual fund giant Legg Mason, with $691 billion in assets under management, is set to roll out its first four ETFs today on the Nasdaq exchange. Three of the four funds offer smart-beta access to the U.S., emerging markets and developed markets, while the fourth targets low-volatility stocks that pay high dividends. The funds, their tickers and expense ratios are as follows:

• Legg Mason Developed ex-US Diversified Core ETF (DDBI), 0.40%
• Legg Mason Emerging Market Diversified Core ETF (EDBI), 0.50%
• Legg Mason US Diversified Core ETF (UDBI), 0.30%
• Legg Mason Low Volatility High Dividend ETF (LVHD), 0.30%

The prospectus says that the regional funds—targeting the U.S., developed foreign markets and emerging markets—covers large-, mid- and small-cap stocks that they group into cap-weighted “investment categories” according to industry or sector, and in the case of the international funds, geography. Those categories are in turn grouped based on their correlations into clusters that are equally weighted.

The low-volatility, high-dividend fund seeks to invest in “profitable U.S. companies with relatively high dividend yields and lower price and earnings volatility,” according to the prospectus. Starting with a universe of the 3,000 largest U.S. stocks, the fund’s underlying index screens out the stocks that have yields that are too high given their earnings and stocks that have not been profitable for the four preceding quarters.

Legg Mason is just the latest mutual fund firm to launch its own index-based ETFs. John Hancock, Goldman Sachs, Pacer and J.P. Morgan have all entered the space in the last 18 months or so with their own smart-beta funds.

Contact Heather Bell at [email protected].