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By Jeff Holt, CFA | 08-28-2017 03:00 PM

This Multiasset Income Fund Keeps Portfolio Slim

Bronze-rated Westwood Income Opportunity is not one of the highest yielders, but it is poised to deliver solid risk-adjusted results over the long run.

Jeff Holt: Multiasset income funds generally aim to provide investors with a diversified portfolio of income-paying securities. Investors that are interested in that objective may want to consider Bronze-rated Westwood Income Opportunity.

Like other multiasset income funds, Westwood Income Opportunity invests across multiple asset classes. In addition to traditional stocks and bonds, this fund invests in areas like preferred stock, master limited partnerships, REITs, and convertibles. Westwood CIO Mark Freeman has been at fund's helm since its 2005 inception, and he ultimately decides on the mix between these asset classes, but he does heavily rely on the bottom-up research from the firm's analysts.

A couple of aspects that distinguish this fund from other multiasset income funds are that it is relatively concentrated and it doesn't reach for yield. It's not uncommon for a multiasset income fund to hold hundreds or even thousands of securities, but this fund sticks to a slim portfolio of roughly 50 to 70 holdings in total. As for yield, this fund's 12-month yield as of July 2017 was only 1.3%, whereas peers are generally closer to 3% to 4% these days. The fund's limited exposure to high-yield bonds contributes to the modest yield.

While the fund may not be one of the highest yielders, this approach has delivered solid risk-adjusted results over the long run under Mark Freeman, and the fund appears poised to build upon past success.

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