Income Opportunity Strategy

An Unconventional Approach to Income

Why a Flexible Income Strategy?

Enhance Income: After years of low yields for traditional income investments, many investors are looking to enhance their portfolio with higher yields.

Mitigate Volatility: Non-traditional income sources may offer the opportunity for higher yields and the potential for higher long-term capital appreciation. When actively managed in a single portfolio, alternative income sources’ potential for lower correlations may mitigate excessive volatility.

Why Income Opportunity?

Align Interests: We are the largest individual investors in the strategy, aligning our interests with those of our investors.

Focus on Value: By targeting high-yielding securities at significant discounts to their intrinsic values, we attempt to generate capital appreciation on top of high current income.

Migrate to Opportunity: The strategy can own almost any type of security across the globe, allowing us to invest tactically in the asset classes we think are likely to generate the best risk-adjusted returns.  The strategy can own high-yield corporate debt, income-paying common stock, preferred shares, convertible securities, REITs, business development companies, MLPs and more.

Why Now?

Manage Duration: Investors worry about their bond portfolios in a rising-rate environment.  A flexible, actively managed portfolio of income-paying securities may exhibit less duration risk than traditional fixed-income securities.

Stay Active: As an active manager, we have the ability to take advantage of changing market conditions and exercise our patient, long-term approach.

How to Invest

Investment Options: We have options for all types of investors. Have questions? Contact us. We’re happy to help.

Institutional Separate Account

Mutual Fund for U.S. Investors

For Financial Advisors:

Visit the Legg Mason Portal

Income Opportunity Strategy Data — 4Q 2016

All data as of 12/31/2016

Investment Minimum: $50 million

Annualized Performance1

  • Gross of Fees
  • Net of Fees
  • Merrill Lynch US High Yield Master II
  • S&P 500

 

QTD

1-Year

3-Year

5-Year

Since Inception (4/3/09)

Gross of Fees

2.68%

15.41%

0.82%

10.18%

16.48%

Net of Fees

2.43%

14.28%

-0.17%

9.09%

15.34%

Merrill Lynch US High Yield Master II

1.88%

17.49%

4.72%

7.35%

12.86%

S&P 500

3.82%

11.96%

8.87%

14.66%

16.70%

Equity Sector Allocation2

  • REITs 23.96%
  • Bonds 22.11%
  • PTP 21.45%
  • Common Equity 15.52%
  • BDC/RIC 8.24%
  • Preferred 6.69%
  • Cash 2.03%

Asset Allocation2

  • Common Equity 69.17%
  • Fixed Income 22.11%
  • Preferred Equity 6.69%
  • Cash 2.03%

Top 10 Holdings By Issuer2

  • The GEO Group, Inc. 5.65%
  • Fortress Transportation & Infrastructure Investors LLC 5.41%
  • Apollo Global Management, LLC 4.81%
  • Valeant Pharmaceuticals International 4.72%
  • New Media Investment Group, Inc. 4.67%
  • Fortress Investment Group LLC 4.66%
  • Chimera Investment Corporation 4.23%
  • New Residential Investment Corp. 4.16%
  • William Lyon Homes 3.95%
  • NorthStar Realty Finance Corp. 3.94%

Characteristics2

  • Number of Holdings 36
  • Indicated Yield3 8.12%
  • Weighted Median Market Cap (billion) $1.37
  • Annual Turnover 60.5%
The nature of financial markets is such that when the overwhelming consensus is on one side, the investment opportunities usually lie on the other. Bill Miller, CFA December 1992