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After four years of bedding down an acquisition, the self-proclaimed “multi-boutique” Legg Mason is once again on the offensive, this time to bolster its non-US business. As managing director of Legg Mason Investments, Terry Johnson is responsible for overseeing its international operations and sales to intermediaries in Europe, the Americas (ex-US), the Middle East, Asia, and offshore products in Japan.

Boston-born Mr Johnson previously worked at JPMorgan on the private banking and asset management side before joining Citigroup Asset Management in April 2003. When Legg Mason acquired Citigroup AM in December 2005, he was appointed to his present position.

Mr Johnson concedes that initially the core focus has been on launching and refining its offshore products, and concurs that British intermediaries have always favoured onshore funds for their clients. However, with an absence of UK-centric marketing and development, and only 10 UK-domiciled funds – compared with 35 Dublin-domiciled offshore funds – Legg Mason clearly has some catching up to do.

“We were never absent in the UK,” he says. “Naturally, after you acquire a company there is a lot of integration work to be done. We spent two years rationalising our product set and trying to bring everything together. Now, we are much more on the offence, having focused on our cross-border funds, to now focus on the UK and to much more proactively bring out our UK fund range, develop it and accentuate the strategies of Legg Mason.”

The new chief executive of Legg Mason, Mark Fetting, has already indicated he wants to redress the balance of business, aiming to bring international assets under management up from 34 per cent to at least 50 per cent. While the US-established bank still sees its home country as “core” to its strategy and future, Mr Johnson says “all signs point to significant growth in Europe, Latin America and Asia, and that growth is double-digit versus single-digit growth in the US”.

“We’re just diversifying. Look at the demographic change in wealth creation, the growth of sovereign wealth funds, mutual fund sales… for us to be a leader in the asset management space, we inevitably must be a leader in those three regions. Given the investment capabilities we have from such a far-ranging group of investment specialists, and the distribution capabilities we have from the Citigroup acquisition, and we are at an earlier stage of that evolution than some of our competitors in developing non-US client assets.”

Mr Johnson refers to Legg Mason as a family, in which the parent company oversees 10 independent investment management firms that run the funds. These subsidiaries have been acquired by Legg Mason at a rate of almost one every four years since 1995 and have significant assets under management, from the largest, Western Asset Management, at $632bn (£348bn), to Batterymarch Financial Management, with $26.5bn.

This “multi-boutique” structure isn’t unique – Mellon and Alliance are similar – but it remains unusual. The benefit to investors includes access to a range of uncorrelated, top-tier investment managers with “no contamination effect” of running off of the same house philosophy and processes, while the subsidiary firms benefit from the international distribution and marketing clout of belonging to one of the top-10 asset management companies in the world.

The model is not without its critics, but Mr Johnson is convinced of its effectiveness: “The corresponding investment excellence far outweighs the complexity they may have in terms of digesting multiple brands,” he says. “We think that is a winning model – and it has been. Over the last 10 years Legg Mason grew from $71bn to $950bn, which is significant growth. Until the Citigroup transaction in 2005, 80 per cent of that was organic, not just through acquisitions.”

However, the recent market turmoil has taken its toll. In May, Legg Mason reported its first loss in 25 years, becoming the first big fund management group to raise public capital to shore up losses from the credit crisis. It issued 20m equity units in the form of preferred shares to raise $1bn, which would partly be deployed to shore up liquidity in its flagging money market funds. And with $2bn already set aside by the company for that same purpose, last November the group received $1.25bn from Kohlberg Kravis Roberts, the private equity firm, in a private placement.

Mr Johnson says: “What is happening in the financial markets is unprecedented and is impacting asset managers and banks across the board. As an asset manager, we are tied to the performance of the markets so you would expect, in a period of dislocation of this magnitude, a little spill-off in terms of the business.”

He adds: “Some of the performance of managers has led to some outflow but we don’t believe that outflow is outside the norms of a market environment of this nature. With a $3bn capital base we are well positioned to weather this storm. This is a temporary situation.”

Even Bill Miller, a world renowned fund manager at Legg Mason Capital Management, who outperformed the market for a full 15 years, has not escaped unscathed. Mr Johnson said, as an intrinsic value manager, Mr Miller inevitably underperformed but he is confident the tables will turn once again to Mr Miller’s advantage.

Elsewhere within the fund range, the emerging markets and Asian portfolios have done well, as has Royce & Associates’ small-cap fund, along with several fixed income strategies. While Mr Johnson isn’t keen to flood the UK market with fund upon fund for the sake of upping their UK-domiciled offerings, he is equally aware that “the product that sold well for the last three years, won’t necessarily do so for the next three years”.

Consequently, in May it brought to market a new Global Multi-Strategy Fixed Income fund and a Global Equity fund. Perhaps volatility in the UK market will help make the case for advisers looking beyond locally domiciled funds. If they do, Mr Johnson certainly won’t be complaining.