Legg Mason Launches Total Return Focused Real Estate Fund

Legg Mason Launches Total Return Focused Real Estate FundThe ClearBridge Real Estate Opportunities Fund (CREOX) launched early last month as a result of a merger with an existing closed-end fund. The new fund is managed by Legg Mason with sub-advisory services provided by its wholly owned subsidiaries ClearBridge and Western Asset Management Company, with an investment objective of total return.

Allocation of Investments

Under normal circumstances, the fund will invest up to 80% of its assets in the securities of real-estate entities, which include REITs (“real estate investment trusts”) as well as non-REIT property-ownership companies, property developers, companies with property ownership as a key capital investment, infrastructure ownership companies, vendors of real estate- and infrastructure-related services, and financial institutions primarily focused on the real-estate industry.

Moreover, investments in mortgage-backed securities (“MBS”), mortgages, loans, collateralized debt obligations (“CDOs”), collateralized mortgage obligations (“CMOs”), collateralized loan obligations (“CLOs”), and asset-backed securities can count as part of the fund’s 80% in real-estate investments; while up to 25% can be invested in a variety of non-real-estate debt instruments, such as U.S. government bonds, preferred stock, convertible debt, and corporate bonds, including those of below-investment-grade quality.

Up to 100% of the fund’s assets may be invested in securities issued by non-U.S. issuers from developed market (“DM”) countries, and up to 20% may be invested in emerging markets (“EM”). No more than 15% may be invested in a particular country, other than the U.S.

Merger With Closed-End Fund

As of the prospectus, dated May 2, the ClearBridge Real Estate Opportunities Fund intended to merge with the closed-end LMP Real Estate Income Fund, essentially converting the closed-end fund to an open end fund. The latter has a track record stretching back to 2006, with total pre-tax returns as reported below:

  • 2006: +34.39%
  • 2007: -27.44%
  • 2008: -49.80%
  • 2009: +63.57%
  • 2010: +33.49%
  • 2011: +4.02%
  • 2012: +20.84%
  • 2013: +0.97%
  • 2014: +30.69%
  • 2015: -0.44%

Shares of the ClearBridge Real Estate Opportunities Fund will be available in a total of eight classes, but the Class O shares are the only class of shares listed with a ticker symbol (CREOX) in the fund’s prospectus. The Class O shares have a 1.00% net-expense ratio and no minimum investment. The expenses and minimums of the other classes are shares are listed below:

  • A: 1.25%, $1,000
  • A2: 1.45%, $1,000
  • C: 2.00%, $1,000
  • FI: 1.25%, N/A
  • R: 1.50%, N/A
  • I: 0.90%, $1 million
  • IS: 0.80%, $1 million

For more information, read the fund’s prospectus.

Past performance does not necessarily predict future results.
Jason Seagraves contributed to this article.