By Ross Kerber
March 21 Legg Mason Inc's Western Asset
Management unit said on Thursday that Chief Investment Officer
Steve Walsh will retire in March of next year after steering its
funds back from a poor performance stretch during the financial
Western Asset, the fixed-income division of Baltimore-based
Legg Mason, said Ken Leech will become CIO effective March 31,
2014. Leech was the firm's CIO from 1998 to 2008, and after a
medical leave returned to lead Western's global investment
Walsh had been Leech's deputy and took over as CIO in 2008,
right in the midst of rough patch for the well-known bond fund
Data from Thomson Reuters' Lipper unit shows that after
beating 66 percent of peer funds in 2006, Western's fixed-income
mutual funds on average beat just 44 percent of peers in 2007
and just 30 percent in 2008. That performance trailed competing
fund sponsors like BlackRock Inc and Franklin Resources
Western's overall record has improved in recent years, but
the underperformance led to investor withdrawals. Excluding
money market funds, investors withdrew $7.9 billion from
Western-advised fixed income mutual funds in 2008, and continued
to pull out money until last year, according to Lipper. In 2012
investors added $2.5 billion to those Western funds.
The outflows contributed to broader problems at Legg Mason,
whose previous Chief Executive Mark Fetting resigned under
pressure last fall.
Last month Legg Mason named as its new CEO Joseph Sullivan,
an insider who vowed to continue the company's structure of
semi-autonomous investment units like Western. Sullivan said he
would also work to offer executives at the affiliates some
equity in their own businesses. [ ID: nL1N0BD5BP ]
With $461.7 billion under management at the end of December,
Western is by far the largest of Legg Mason's affiliates.
Others include the company's equity-focused ClearBridge
Investments, with $57.3 billion at the same point in time, and
value investor Brandywine Global with $42.9 billion, according
to an investor presentation by the company.
Walsh, 54, will retire for personal reasons, to become more
involved in family and charity work, said Western Chief
Executive James Hirschmann in a telephone interview.
Walsh and Leech will be co-CIOs for the next twelve months.
Leech, 58 years old, will remain based at Western's
headquarters in Pasadena, California, where he and Walsh have
been longtime collaborators, Hirschmann said.
"Ken and Steve have sat next to each other for the past 23
years, so they are very much of the same philosophical approach
to investing," Hirschmann said.