The $100 million worth of investments will form part of IOOF’s multi-manager funds.
Legg Mason described the Australian equities strategy as a ‘dynamic value strategy’ while the listed property investment is a low-concentration Australian real estate investment trust (A-REIT) strategy to avoid over concentration.
The ‘dynamic value’ Australian equity strategy was developed jointly over the past 12 months by IOOF, head of Australian equities Daniel Farmer and Legg Mason Australian equities chief investment officer Reece Birtles.
Legg Mason said it was engaged by IOOF to assist with developing a style-switching strategy that expects to deliver rewards when value styles are in favour, as well as when markets are more risk averse and core strategies may perform better.
This is allows IOOF to shift the portfolio systematically between the value and core styles without the need to time the market or buy and sell out of different funds or appoint new managers, Legg Mason stated.
The low-concentration A-REIT strategy was developed through a similar consultation process between IOOF head of property Simon Gross and Legg Mason Australian equities portfolio manager Ashton Reid.
It is designed to provide IOOF with exposure to A-REITs without the potential risk of over concentration from holding too few stocks at high weightings.
The portfolio reconstructs the A-REIT index by limiting the largest stocks to a maximum percentage weighting, allowing the portfolio manager to maintain active positions and avoid skewing the portfolio towards small property trusts, Legg Mason stated.
