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%
Our portfolio doesn't depend on our being right about the twists and turns of the economy.  It depends on our understanding of the prospects for our companies and what is discounted in their share prices. Bill Miller, CFA December 2000