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Legg Mason weighs launching Chilean feeder funds

Legg Mason weighs launching Chilean feeder funds

Legg Mason Asset Management is considering launching feeder funds for Chilean retail clients as the local investment industry continues to strengthen.

Chile’s 2015 tax amnesty program, which collected over $1.5 billion in tax revenues, has widely been seen as a success and has brought wealth back onshore to its burgeoning investment scene.

The US-based firm is currently in the early stages of talking to local players about developing feeder funds to take advantage of this new influx of wealth.

Jorge Letelier, regional director for the Chilean market told Citywire Americas: ‘The market has changed after the tax amnesty. A lot of money was brought back to Chile and so the retail business has changed. Local distributors have become stronger.’

He said while there a number of tax advantages to launching a product via a feeder fund, the complexity of the regulatory framework needs to be carefully considered.

‘We are having conversations with a few of the local players to see if there is the possibility of having local feeders in Chile, but we are in the very early stages,' said Letelier. ‘You have to be careful to follow the spirt of the law.’

If Legg Mason were to move forward, it would be building on its experience of launching feeder funds in Brazil, which is the only way local investors can currently access foreign mutual funds. 

Through its affiliate Western Asset, which has a local presence in Brazil, the firm launched a mirror of the Legg Mason ClearBridge Global Equity Fund in August 2016 and another that feeds into the Western Asset Macro Opportunities Fund in November 2015. The two funds have amassed about BRL 600 million ($192.4 million) so far.

While the firm has been successful in getting Brazilian private banks and wealth firms to invest in the feeder funds, it is now looking to target the country's institutional market, according to Roberto Teperman.

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