In what looks like a marketing effort to improve positioning in the retirement market, Baltimore-based Legg Mason will fold its $656 million Value Institutional Portfolio into its $12 billion Value Trust Fund, pending March 9 shareholder approval.

Value Institutional has always been indexed with Value Trust but, because the institutional fund is only approaching its third year since inception, potential investors aren't able to receive the most complete picture of the fund's performance history. Furthermore, without both three- and five-year performance data, the fund may never see the light of day in many 401(k) programs.

"Much more information is available for Value Trust, especially from third-party information providers," said Mary Connell, director of marketing for Legg Mason Institutional Funds. "We think it's an important value for shareholders who may be a 401(k) participant."

Legg Mason originally launched the institutional portfolio in order to address the separate needs of institutional investors, but executives decided that the separate funds created a redundancy. Merging the two funds is expected to increase the amount of information available to institutional investors and improve the efficiency in accessing the information. Value Trust will be restructured into three share classes differentiated by the 12b-1 fees: Legg Mason will impose a fee of 95 basis points on the retail share class, 25 basis points on the financial intermediary share class, and no fee for the institutional share class. There will be no changes in fund managers, investment strategy, personnel, or back-office business that result from this merger.

 

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