Legg Mason Inc. has launched its first international mutual fund, which also is the first product to emerge from the purchase of Batterymarch Financial Management last month, the company said yesterday.
The Legg Mason International Equity Trust, which began share sales Friday, is the Baltimore investment firm's 15th mutual fund. It also is the first to be managed by Boston-based Batterymarch, which Legg Mason acquired in January for an initial $54 million in cash. That could rise to as much as $120 million over the years, depending on Batterymarch's performance.
Up to 35 percent of the International Equity Trust's assets may be invested in "emerging markets," or developing countries, according to Edward A. Taber III, executive vice president at Legg.
"Whether [the fund's managers] think the emerging markets are undervalued enough . . . is something I don't think they've made their minds up yet," Mr. Taber said.
"The new fund will have an annual "12-b-1" charge to shareholders of about 1 percent of assets. It will not have a front-end or back-end charge.
About two-thirds of Batterymarch's $6 billion under management is invested in global and emerging markets accounts. With the Boston company under its belt, Legg Mason now has $23 billion in assets under management, including $4 billion in 14 other mutual funds.
An international fund that Batterymarch manages for Vanguard was recently ranked by Barron's as one of the 50 best stock funds of any type for its 10-year performance, according to Mr. Taber. He noted that the $1 billion Vanguard Trustees Equity Fund was in the middle of the international pack for three- and five-year returns.
Charles Lovejoy, of Batterymarch, will manage the new fund. He joined the company in 1992 from Boston International Advisors, where he was a managing director. Before that Mr. Lovejoy was a senior vice president at Putnam Management Co.
Despite recent losses in international funds, "there's no question that they have been one of the big growth engines of the mutual fund industry in the last four or five years," said Kurt Cerulli, a principal in Cerulli Associates Inc., a Boston financial services consulting firm.
At the end of last year, international funds held almost 12 percent of all stock fund assets in the United States, double their share at the end of 1990, according to the Investment Company Institute, a trade association.
International investors have been hurt in rcecent months, partly because of the Mexican peso crisis. "I'm sure glad we brought it out now rather than six months ago," Mr. Taber said of Legg's new fund.