The slew of recently announced fund mergers by Legg Mason is a sign of the big job that the firm has to clean up the line it acquired from Citigroup. The mergers of 27 funds into 16 other funds are planned for early next year.
“Basically there’s a lot of consolidation and work to be done just bringing together Salomon Brothers and Smith Barney,” said Morningstar analyst Kerry O’Boyle. “The asset management arm in Citigroup was just a very, very small part of that huge financial empire. There wasn’t any reason for them to throw assets at that group” to make sure the operation was efficient.
Before the asset-swap with Legg Mason, O’Boyle said, Citigroup’s different asset managers operated on different platforms and shared neither research nor trading desks--despite sometimes working on the same floor.
Among the mergers, the $2.7 billion Legg Mason Partners Capital and Income Fund will absorb four other funds, including the Legg Mason Partners Dividend and Income Fund and the Salomon Brothers Balanced Fund. A Citigroup spokeswoman did not return phone calls.