CFLGX
ClearBridge Tactical Dividend Income-A
High Current Income with a Focus on Dividends
ClearBridge Tactical Dividend Income-A (CFLGX) is designed to generate high current income, with capital appreciation as a secondary objective. The fund achieves this by investing at least 80% of its net assets in equity and equity-related securities that provide investment income, dividend payments, or other distributions. This focus on income generation makes CFLGX particularly appealing to investors seeking regular cash flow from their investments. With a yield of 3.10%, the fund offers a competitive income stream compared to other large-cap value funds. The emphasis on dividend-paying stocks aligns with the fund’s objective of providing a steady income, making it a suitable choice for income-focused investors.
At A Glance
Executive Summary
CFLGX offers a 3.10% yield with a focus on large-cap value stocks, providing high current income and capital appreciation potential.
High current income with 3.10% yield Strong focus on large-cap value stocks Diversified sector allocation
Higher expense ratio at 1.40% Negative alpha indicating underperformance Potential volatility with high downside risk
Sector Allocation: A Diverse Approach
CFLGX’s sector allocation is diverse, with significant investments in energy (19.21%), technology (18.64%), and real estate (14.73%). This diversification helps mitigate sector-specific risks and provides exposure to various growth opportunities across different industries. The fund’s substantial allocation to the energy sector reflects its strategy to capitalize on high-yield opportunities, while the technology sector offers potential for capital appreciation. Additionally, the real estate sector provides a stable income stream, aligning with the fund’s income-focused strategy. This balanced sector allocation supports the fund’s dual objectives of income generation and capital appreciation.
Performance Metrics: A Mixed Bag
The performance metrics of CFLGX present a mixed picture. While the fund has delivered a strong one-year return of 30.82%, outperforming many of its peers, its alpha of -6.85% indicates underperformance relative to its benchmark, the S&P 500 Total Return Index. The fund’s beta of 0.74 suggests lower volatility compared to the market, which can be attractive to risk-averse investors. However, the negative Sharpe Ratio of -0.67 and Treynor Ratio of -9.29 highlight challenges in achieving risk-adjusted returns. These metrics suggest that while the fund has potential for high returns, it also carries certain risks that investors should consider.
Comparative Analysis: Standing Among Peers
When compared to similar funds, CFLGX holds its ground with a competitive one-year return of 30.82%. However, its expense ratio of 1.40% is higher than some peers, such as Touchstone Focused-A (TFOAX) with an expense ratio of 0.0119. Despite this, CFLGX’s yield of 3.10% is notably higher than those of its peers, making it an attractive option for income-seeking investors. The fund’s beta of 0.74 indicates lower market sensitivity compared to peers like PGIM Jennison Rising Dividend-A (PJDAX) with a beta of 0.85, suggesting a potentially more stable investment in volatile markets.
Risk and Volatility: Navigating Market Fluctuations
CFLGX exhibits certain risk characteristics that investors should be aware of. The fund’s downside risk, measured by a downside risk (UI) of 1.34, indicates potential vulnerability during market downturns. Additionally, the max drawdown of -5.0% highlights the extent of potential losses during adverse market conditions. However, the fund’s beta of 0.74 suggests it is less volatile than the broader market, which can be reassuring for conservative investors. The correlation with the benchmark at 88.75% indicates a strong alignment with market movements, which can be beneficial for those looking to track market trends while seeking income.
Portfolio Composition: A Focus on Large-Cap Value
CFLGX’s portfolio is heavily weighted towards large-cap value stocks, with 91.13% of its assets in U.S. equities. The top holdings include well-known companies such as Energy Transfer LP, Broadcom Inc, and Apple Inc, which are known for their strong dividend payouts and stable growth prospects. This focus on large-cap value stocks aligns with the fund’s objective of providing high current income while also offering potential for capital appreciation. The fund’s allocation to large and extra-large market cap stocks, comprising 54.47% of the portfolio, underscores its strategy of investing in established companies with reliable income streams.
Expense Ratio: A Consideration for Investors
The expense ratio of CFLGX stands at 1.40%, which is relatively high compared to some of its peers. This higher expense ratio can impact the net returns for investors, especially when compared to funds with lower fees. However, the fund’s strong yield of 3.10% and its focus on high-dividend stocks may justify the higher costs for investors seeking income. It’s important for potential investors to weigh the benefits of the fund’s income-generating strategy against the cost of investing, considering how the expense ratio might affect their overall investment returns over time.
Conclusion: Is CFLGX Right for You?
ClearBridge Tactical Dividend Income-A (CFLGX) stands out for its focus on generating high current income through investments in large-cap value stocks. With a yield of 3.10%, it offers a compelling option for income-focused investors. However, the fund’s higher expense ratio and certain risk metrics, such as negative alpha and downside risk, require careful consideration. Investors seeking a stable income stream with exposure to established companies may find CFLGX appealing, but should also be mindful of the potential for volatility and the impact of fees on returns. Overall, CFLGX is best suited for those prioritizing income over growth, with a tolerance for moderate risk.
Similar Securities
ACSTX: Invesco Comstock-A | Value Investing for Growth and Income
ACSTX offers value investing in large-cap stocks with a focus on growth and income, featuring a competitive expense ratio and diversified holdings.
DODGX: Dodge & Cox Stock-I | Growth and Income with Value Focus
Dodge & Cox Stock-I (DODGX) offers a balanced approach to growth and income with a competitive 0.51% expense ratio and strong sector diversification.
ACGIX: Invesco Growth & Income-A | Value-Focused Growth & Income Fund
ACGIX offers a strategic blend of income and growth with a focus on large-cap value stocks, featuring a competitive 0.79% expense ratio.
JIDVX: Janus Henderson US Dividend Income-I | Dividend-Focused Equity Fund
JIDVX offers a 1.91% yield with a focus on U.S. dividend-paying equities, maintaining a competitive 0.79% expense ratio.
LMVTX: ClearBridge Value-C | Value-Focused Growth Fund
LMVTX offers value-focused equity investments with a 1-year return of 33.24%, outperforming peers with a disciplined value strategy.
Futher Reading
https://www.morningstar.com/funds/xnas/CFLGX/quote
https://finance.yahoo.com/quote/CFLGX/”>Yahoo: ClearBridge Tactical Dividend Income-A
https://ftcloud.fasttrack.net/web/chart/CFLGX
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