The low rate environment presents a challenge for both income investors and those seeking attractive fixed income returns. We believe a diversified, value-oriented approach – one that draws on the full spectrum of income opportunities available in today’s global bond market – may provide a useful investment solution.

 

 


Western Asset Income Fund: 
A solution for enhancing income potential with a truly global focus.

The Western Asset Income Fund is primarily focused on generating high current income by leveraging Western Asset’s best income ideas across all global credit markets. This benchmark-agnostic approach is designed to offer the maximum amount of flexibility from both an investment perspective and a risk-management perspective.
 

Why Western Asset

  • Western Asset’s global fixed income resources include specialized sector teams that cover all major global credit markets.
  • Western’s process seeks to take advantage of value opportunities across the global credit spectrum and employs a diversified strategies approach so that no one strategy dominates performance.
  • The process employs hedging techniques to help provide a buffer against sustained and material market shocks as a complement to its use of duration as a “ballast” against spread risk.

 

Embrace the Power of Income 

 

Income Investors depicted in drawing

Income is central to bond performance

Given the potential for rising rates and various macro pressures, appreciation in bond prices may be limited in the months and years ahead. As a result, Western Asset believes coupon income will likely be the most significant contributor to performance going forward. Fixed income managers with the expertise to access and evaluate higher-yielding bonds from a very wide range of sources may have an advantage in that environment.

 

Growth of investor demand for income depicted in airplane ascent drawing

Investor demand for income is likely to grow

The world’s population is aging while biomedical advances continue to extend life expectancy, which should increase demand for income. Other secular forces (i.e., rising debt levels on global growth and continued advances in technology) will likely restrain the long-term trajectory of interest rates, keeping the search for income front and center.

 

Drawing of Globe to depict fixed income opportunity

More sources of income are now available

Developments in the global fixed income market over the last 20 years have changed the landscape in ways many investors don’t yet recognize. In developed markets, the opportunity set has expanded significantly — it now includes corporate debt across the whole credit quality and maturity spectrum: bank loans, mortgage-backed securities (MBS), securitized assets, covered bonds and private debt. In emerging markets, “frontier market” debt, corporate credit, local currency-denominated government debt and inflation-linked notes are also candidates for a broadly diversified portfolio.

 


Coupon income is a primary component of total return1

Coupon Income & Total Return Chart

 

 

Fund Focus

SDSAX - Western Asset Income Fund

Seeking high current income via a globally diverse portfolio of fixed income securities.


Insights from Western Asset
 

Embrace the Power of Income

Western Asset’s active approach combines long-term fundamental value with multiple diversified strategies.


Quarterly Market Commentary image of investors meeting

Third Quarter Outlook

Western Asset CIO Ken Leech surveys the state of global bond markets, sharing views on growth, inflation and the impact of trade and monetary policy.


Quarterly Market Commentary image of investors meeting

Discover Western Asset

A globally integrated fixed income manager, sourcing ideas and investment solutions worldwide.



Source: Bloomberg Barclays and Western Asset, as of 5/31/18. Past performance is no guarantee of future results. Indexes are unmanaged, and not available for direct investment. Index returns do not include fees or sales charges.

Fixed-income securities involve interest rate, credit, inflation, and reinvestment risks; and possible loss of principal. As interest rates rise, the value of fixed-income securities falls. High yield bonds are subject to greater price volatility, illiquidity, and possibility of default. Asset-backed, mortgage-backed or mortgage-related securities are subject to prepayment and extension risks. International investments are subject to special risks, including currency fluctuations and social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets. Derivatives, such as options and futures, can be illiquid, may disproportionately increase losses, and have a potentially large impact on Fund performance. Leverage may increase volatility and possibility of loss.  Potential active and frequent trading may result in higher transaction costs and increased investor liability.

1 Coupon is the periodic interest payment made to the bondholders during the life of the bond. U.S. High Yield represented by the Bloomberg Barclays U.S. Corporate High Yield Index, which covers the universe of fixed-rate, non-investment-grade debt, including corporate and non-corporate sectors. U.S. Treasury represented by the Bloomberg Barclays U.S. Treasury Index, which is the U.S. Treasury component of the U.S. Government index. U.S. Credit represented by the Bloomberg Barclays U.S. Credit Index, which is the credit component of the Bloomberg Barclays Capital U.S. Aggregate Bond Index. The Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index of U.S. investment-grade fixed income securities. U.S. MBS represented by the Bloomberg Barclays U.S. Agency Mortgage Backed Securities (MBS) Index, which is the U.S. MBS component of the U.S. Aggregate index. The MBS Index covers the mortgage-backed pass-through securities of Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC). Please note that an investor cannot invest directly in an index.


IMPORTANT INFORMATION: All investments involve risk, including loss of principal. Past performance is no guarantee of future results. Please see each product’s web page for specific details regarding investment objective, risks, performance and other important information. Review this information carefully before you make any investment decision.

Carefully consider a fund’s investment objectives, risks, charges and expenses before investing. Please view the prospectus or summary prospectus for this and other information. Read it carefully.

FINANCIAL ADVISORS: Please note that not all share classes may be available for sale at your firm. Please call the Legg Mason Sales Desk 1-800-822-5544 or your Legg Mason Sales contact for more information.