Legg Mason filed with the SEC yesterday to launch the Western Asset Ultra Short Obligations Fund, which will be sub-advised by its subsidiary, Western Asset Management Company.
The fund will be available in three share classes. Class FI shares carry a price tag of 70 basis points, class I shares charge 45 bps and class IS shares carry an expense ratio of 35 bps.
Under normal circumstances, the fund expects to maintain a dollar-weighted average effective maturity of not more than 90 days. The “average effective portfolio maturity” of the fund is a weighted average of all the maturities of the securities in the portfolio, computed by weighting each security’s effective maturity, as estimated by the subadviser, by the market value of the security.
In addition, the fund will not purchase a security if, at the time of purchase, the security has a remaining final maturity, taking into account demand features and any interest reset provisions, of more than 397 days.
The fund will only buy securities that are rated in one of the top two short-term rating categories (which may include gradations within each category) by one or more rating agencies followed by the fund or, if unrated, are judged by the subadviser to be of comparable quality. However, the fund intends to limit its investment in securities that, at the time of purchase, are rated in the second highest short-term rating category (or, if unrated, determined by the subadviser to be of comparable quality) to not more than 5% of its total assets.
