Legg Mason is to launch a small cap exchange traded-fund (ETF) focused on value.
The firm has filed for the Legg Mason Small Cap Quality Value ETF with the Securities and Exchange Commission.
It will be subadvised by the firm’s subsidiaries, Royce & Associates and Western Asset.
The fund will track the Royce Small Cap Quality Value index. It must invest at least 80% of its assets in securities within the index.
The index targets stocks with lower valuation and higher profitability and debt coverage, or available cashflow to pay debt obligations.
The remaining 20% of the fund is to be allocated towards cash or cash equivalents.
Western Asset will be in charge of the fund’s short-term allocations including weightings towards cash.
George Necakov and Michael Connors are in charge of day-to-day portfolio management and the management fee is 0.6%.
‘This effort is part of our strategy of making our investment capabilities available in a wide variety of vehicles to meet the evolving needs of our clients, coupled with our long-term view that the tax efficiencies and cost advantages of structures like ETFs have the potential to improve after-tax returns for our clients,’ said a Legg Mason spokeswoman.
Last month, the firm filed for its first two environmental, social, and governance (ESG) ETFs. It registered the ClearBridge Dividend Equity Strategy ESG and the ClearBridge Large Cap Growth ESG ETF.
The Legg Mason Small Cap Quality ETF, together with the two ESG ETFs in registration, would total 10 ETF offerings from the firm.