Benefits of investing in the Western Asset Macro Opportunities Bond Fund

• A total-return focused, unconstrained fixed income fund that invests in a combination of investment grade, high yielding debt securities and financial derivative instruments

• Provides concentrated and opportunistic exposures to investment manger's key themes

• Designed to potentially have low correlations to equity and traditional fixed income over the long term 

Risk level

Medium to High

About the Fund

The Fund seeks to maximise total return through capital appreciation and income by investing in a combination of investment grade, high yielding debt securities and financial derivative instruments.

Investment philosophy

The Fund's investment philosophy is reflective of the investment philosophy applied by the Underlying Fund's Sub-Fund Investment Manager, Western Asset.

The investment philosophy of Western Asset is based on long-term fundamental value investing, using multiple diversified strategies. Western Asset's investment decision-making process and organisation are specifically designed to align with and to support this philosophy.

Investment strategy

The Fund accesses its investment strategy and objective through investing in the Underlying Fund.

With respect to assessing relative attractiveness of the opportunity set, Western Asset believes in a top-down view of the financial environment based on a long-term, fundamental, value-oriented approach. Western Asset complements this with a bottom-up analysis focused on two beliefs:

1. That intensive research may identify systemic miss-pricings with respect to the term structure of rates or individual securities as well as other opportunities; and
2. That markets tend to over-react, which may create asymmetric value opportunities. Western Asset believes positions can be established to capitalize on these situations to add value over time.

The strategy's risk asset positioning focuses on global relative-value opportunities within the credit universe and foreign exchange. Active management of duration, yield curve and volatility make the strategy dynamic as these can be used both as sources of return or to hedge risk asset positions. The strategy maintains a focus on liquidity and preservation of capital.

How we invest your money

The Fund's investment guidelines will mirror those of the Underlying Fund. To reduce currency risk the Fund invests in an Australian dollar share class of the Underlying Fund. The Fund predominantly invests in the Underlying Fund but can hold up to 10% cash. The Underlying Fund seeks to manage currency risk through the use of currency hedging.

The Underlying Fund seeks to maximise total return against a volatility budget of up to 10% per annum. The key investment guidelines implemented in order to control the overall risk of the Underlying Fund are as follows:

• The Underlying Fund may purchase an investment which is rated as below investment grade, provided that the purchase of that investment would not mean that more than 50% of the Underlying Fund's Net Asset Value are not rated Investment Grade or above (or if unrated, deemed to be of comparable credit quality).

• At least 50% of the Underlying Fund's net assets must be in US dollar denominated securities (after hedging).

• The Underlying Fund may invest up to 25 per cent of its Net Asset Value in securities issued by Russian issuers.

• The average duration of the Underlying Fund's investments will range between -5 and 10 years.

The market risk of the Underlying Fund is measured using the VaR Methodology. The absolute VaR of the Underlying Fund will not exceed 20 per cent of the Fund's Net Asset Value. Investors should note that VaR is a risk measurement tool that makes certain assumptions, which could prove wrong, and has inherent limitations. Funds using VaR may still have substantial losses.

The Underlying Fund has a high economic leverage limit, as calculated using the sum of the notionals of the derivatives held by the Underlying Fund. The limit will be less than 2,000 per cent of the Underlying Fund's Net Asset Value.

The Underlying Fund may invest up to 10% of its Net Asset Value in units or shares of open-ended collective investment schemes within the meaning of UCITS Regulations, provided they comply with the minimum rating requirements above.

A maximum of 10 per cent of the Underlying Funds Net Asset Value may be invested in convertible debt securities and/or debt securities with an option to acquire equity securities. The Underlying Fund will not purchase equity securities or beneficial interests in equity securities except for preferred shares or warrants, provided that no more than 10 per cent of the Underlying Funds Net Asset Value may be invested in preferred shares and/or warrants.

The Underlying Fund may purchase unsecuritised participations in, or assignments of floating rate mortgages or other commercial loans that are liquid up to a maximum of 10 per cent of the Net Asset Value of the Underlying Fund.