Exchange Traded Funds

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Solution-driven ETFs from Legg Mason
  • New approaches to address diversification, volatility and income

Legg Mason's new suite of ETFs represents a new level of choice for investors and advisors

For the first time, our firm's deep investment expertise is available with the liquidity, transparency and cost-efficiency associated with ETFs. Read MORE.

Manager in focus: QS Investors

QS Investors has a long history as an institutional manager specializing in rules-based strategies in global equities, liquid alternatives and more.

QS Investors' Diversification Based Investing (QS DBI) methodology rethinks conventional wisdom about how to diversify equities – and is the basis for 3 ETFs in the suite, each with a different regional focus (UDBI, DDBI, EDBI). Read MORE.

In addition, QS takes a distinct approach to low-volatility equity income – with a focus on sustainable dividends, historical volatility and company fundamentals – in its LVHD ETF. Read MORE.

At QS Investors, portfolios are managed on a collaborative basis using a systematic, rules-based approach that combines complementary behavioral and fundamental insights in a repeatable, risk-aware process. Read MORE.


Diversification does not guarantee a profit or protect against a loss. Income and yields will fluctuate and are not guaranteed.

Equity securities are subject to price fluctuation and possible loss of principal.

International investments are subject to special risks including currency fluctuations and social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets.

Solutions-Driven
ETFs
Diversification Based Investing (QS DBITM)
  • Broad, balanced equity market exposure
  • Macro-level diversification – by sector, country and currency
  • Seeks to avoid the concentration risks in traditional index strategies
  • Developed more than a decade ago for institutional investors

QS DBI seeks to improve diversification and reduce concentration risk relative to equity strategies that use cap-weighted indexes (such as the S&P 500 Index) as benchmarks.

A core strategy with broad exposure

Traditional index strategies may generate significant concentrations in "hot" stocks and sectors, creating unintended risks for investors. QS DBI provides an alternative approach, seeking more balanced exposure to the overall market over a full market cycle.

Macro-level diversification

QS DBI allocates capital based on correlations at the sector, country and currency level, diversifying risk based on sensitivity to macro themes, rather than market capitalization.

Based on institutional methodology

Developed for institutional investors more than a decade ago, QS DBI is a rules-based strategy that seeks solid risk-adjusted returns while limiting the downside risk associated with market bubbles.

Investment Process


View Legg Mason's QS DBI Products

Legg Mason US
Diversified Core ETF

Seeks to track the investment results of an index composed of publicly traded U.S. equity securities
            

View UDBI

Legg Mason Emerging Markets
Diversified Core ETF

Seeks to track the investment results of an index composed of publicly traded equity securities in emerging markets

View EDBI

Legg Mason Developed
ex-US Diversified Core ETF

Seeks to track the investment results of an index composed of publicly traded securities of developed markets outside the United States

View DDBI

The S&P 500 Index is an unmanaged index of common stock performance. An investor cannot invest directly in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges.

Diversification does not guarantee a profit or protect against a loss.

Equity securities are subject to price fluctuation and possible loss of principal.

International investments are subject to special risks, including currency fluctuations and social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets.

Diversification
by Design
Low Volatility High Dividend
  • All-cap equity income strategies targeting lower volatility
  • Focused on quality firms with consistent dividend histories
  • Targets sustainable income as a driver of price stability

Yield-hungry investors have flocked to dividend stocks in recent years, yet equities and other income-producing investments often come with the potential for heightened volatility.

Legg Mason Low Volatility High Dividend ETF (LVHD) and Legg Mason International Low Volatility High Dividend ETF (LVHI) are ETF strategies that seek to deliver income – but without as much of the volatility that can come from traditional equity income investments.

Seeking equity income with reduced volatility

Designed for investors who want income and equity exposure while seeking to mitigate volatility.

Focused on firms with sound financial health

Seeks stocks from companies with strong balance sheets, consistent earnings, and other factors typically associated with sustainable dividend payouts.

Emphasis on addressing volatility

While sustainable dividends may be generally associated with lower volatility than the market overall, LVHD and LVHI also focus on the volatility of individual stocks.

The Funds are built around three tenets:

  1. Low volatility
    • Equity market participation
    • Potentially lower drawdowns in declining markets
  2. Sustainable high dividends
    • Seeks to provide income-generation
    • Potentially mitigating exposure to distressed companies
  3. Complementary factors
    • Working together: combining screens of lower volatility and sustainable high dividends can lower portfolio risk

View the Legg Mason Low Volatility, High Dividend Products

Legg Mason Low Volatility High Dividend ETF (LVHD)

Focuses on U.S. companies who appear to have the earnings power to support sustainable dividends with lower volatility then the broader market.

View LVHD

Legg Mason International Low Volatility High Dividend ETF (LVHI)

Focuses on sustainable dividends and lower volatility outside the U.S., where potentially higher dividends could further enhance portfolio income.

View LVHI

The Funds are newly organized, with a limited history of operations. Equity securities are subject to price fluctuation and possible loss of principal. Dividends are not guaranteed, and a company may reduce or eliminate its dividend at any time. In rising markets, the value of large-cap stocks may not rise as much as that of smaller-cap stocks. Small- and mid-cap stocks involve greater risks and volatility than large-cap stocks. The Funds may focus their investments in certain industries, increasing its vulnerability to market volatility. There is no guarantee that the Funds will achieve a high degree of correlation to the indices they seek to track. The Funds do not seek to outperform the indices they track, and they do not seek temporary defensive positions when markets decline or appear overvalued. Derivatives, such as options and futures, can be illiquid, may disproportionately increase losses, and they do not seek temporary defensive positions when markets decline or appear overvalued. Derivatives, such as options and futures, can be illiquid, may disproportionately increase losses, and have a potentially large impact on Fund performance.

Legg Mason International Low Volatility High Dividend ETF: International investments are subject to special risks, including currency fluctuations and social, economic and political uncertainties, which could increase volatility. Currency investing contains heightened risk that include market, political, regulatory, and natural conditions and may not be suitable for all investors.

New Strategies
for Income
Beyond Smart Beta
  • "Smart beta" now covers a huge variety of strategies
  • "Outcome-based investing" may provide a better view

When introduced a decade ago, "smart beta" strategies promised investors to go beyond the limitations of traditional market-cap investing by tailoring exposures to the overall market. But the number of products grouped under the smart beta umbrella has grown dramatically in recent years, leaving many investors confused.

Legg Mason believes a better way to view this category is as strategies focused on investment outcomes, including:

Outcome: Diversification

Broad equity indexes are often considered highly diversified due to their large number of stock holdings. Yet large concentrations can exist within the indexes that leave investors heavily exposed to a certain style or sector.

Recognizing the issue, non-traditional diversification techniques can seek to reduce concentration risks among specific stocks, countries, sectors or single factors.

Outcome: Lower Volatility

While volatility is all but inevitable in equity investing, many investors seek ways to reduce volatility in the context of their investment goals.

One approach is factor-based strategies that have a bias to stocks based on specific traits such as momentum, value, volatility, etc. Securities may be selected, or rejected, based on these specific factors. Targeting quality dividend stocks provides one way to provide broad market exposure while seeking lower volatility than the overall market.


Diversification does not assure a profit or protect against a loss.

Equity securities are subject to price fluctuation and possible loss of principal. Income and yields will fluctuate and are not guaranteed.

International investments are subject to special risks, including currency fluctuations and social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets.

The Evolution
of Smart Beta