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A Rating Upgrade as Legg Mason Mends

We've raised Legg's Parent rating to Positive from Neutral following improvements to its affiliate portfolio, but challenges do remain.

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Legg Mason operates a multiaffiliate model, in which the parent company handles distribution and marketing while affiliates--all owned by Legg Mason--operate with a fair amount of autonomy on the investment side. The firm has been on the mend since its poor showing during the financial crisis of 2007-09, making several changes to its leadership team and its affiliate portfolio.

There are now nine affiliates, down from more than a dozen a few years ago, including Western Asset, a major fixed-income player traditionally focused on credit, and ClearBridge Investments, a quality-driven fundamental equity shop. Other prominent affiliates include Royce & Associates, a specialty small-cap equity player, and Brandywine Global, a global fixed-income and equity firm. Western Asset, ClearBridge, Royce, and Brandywine Global account for more than 85% of Legg Mason’s assets under management, and all have strong investment cultures and stick to their areas of expertise.

Andrew Daniels does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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