Western Asset Core Plus Bond Fund Class R · NASDAQ:WAPRX
Western Asset Core Plus Bond Fund Class R — Western Asset Management Company — Non-Deal Roadshow (November 2024)
16 slides from Western Asset Core Plus Bond Fund Class R's roadshow presentation, Nov 7, 2024
Slide 1: Post-Election Strategy Update – US Core and Core Plus
Post-Election Strategy Update – US Core and Core Plus November 7, 2024 Travis M. Carr, CFA Mark Lindbloom Product Specialist Head of Broad Markets, Portfolio Manager 1
Slide 2: US Broad Strategy Committee
US Broad Strategy Committee The US Broad Strategy Committee sets the overall themes for the US broad market investment strategies. Michael C. Buchanan, CFA Sets macro and sector investment themes Chief Investment Officer Meets weekly to evaluate and establish the Amit Chopra, CFA US investment o
Slide 3: US Broad Market Team
US Broad Market Team Western Asset Investment Team Investment Management Professionals Portfolio Management Risk Management Portfolio Analysis Chief Investment Officer: Michael C. Buchanan 115 Investment Professionals on five continents and seven offices, as of September 30, 2024 Prashant Chandr
Slide 4: Scenario Analysis
Scenario Analysis Three Scenarios and Key Assumptions: 1) Base Case Inflation continues to recede, growth slows, but recession is avoided The deteriorating fiscal deficit continues to steepen the yield curve Corporate fundamentals and technicals remain resilient, slight decrease in corporate s
Slide 5: Global Disinflation Is Broad-Based and Ongoing
Global Disinflation Is Broad-Based and Ongoing US Core PCE Nears Fed Target Global Inflation¹ Core PCE 8% 8% Headline 7% Core 7% Core Goods 6% Services 6% 5% 5% Year-over-Year 4% 4% 3% 3% 2% 2% 1% 1% 3m annualized Core PCE 0% 6m annualized Core PCE 0% 1yr annualized Core PCE -1% -1% Fed Core PCE Tar
Slide 6: Employment
Employment “We do not believe that we need to see further cooling in labor market conditions to achieve 2% inflation.” — Chair Powell, September 30, 2024 Change in Total Nonfarm Employment 1,000 Change in Goods-Producing Employment (SA, Thous) Change in Private Service-Providing Employment (SA, Thou
Slide 7: US Federal Reserve
US Federal Reserve Fed now cutting, but by how much? “Looking forward, if the economy evolves broadly as expected, policy will move over time toward a more neutral state.” — Chair Powell, September 30, 2024 Fed Funds 6% Fed Funds Forecast Fed Funds Futures FOMC 5% Forecast 4% 3% 2% 1% 0% 2015 2016 2
Slide 8: US Treasury Yield Curves
US Treasury Yield Curves High volatility over the last few months US Treasury Yield Curves 6.0 5.0 Percent 30 Jun 24 31 Oct 24 30 Sep 24 4.0 31 Dec 23 3.0 3M 1Y 2Y 3Y 5Y 7Y 10Y 30Y Maturity (yrs) Source: Bloomberg. As of 31 Oct 24 8
Slide 9: Spread Sector Excess Returns
Spread Sector Excess Returns Spread sectors have outperformed Year-to-Date Ending 31 Oct 24 10 8.5 8 6 5.7 5.2 4.4 4.2 4 2.6 2.7 2.7 2.9 Percent 2.2 1.8 2 0 0.0 -2 -1.5 -4 EM US US IG US UK IG Euro IG US Australia Non- US EMD Euro European Local MBS Credit CMBS Credit Credit Bank IG Credit Agency Hi
Slide 10: Sector Exposure
Sector Exposure Representative Core Plus Account vs. Bloomberg US Aggregate USD Unhedged Index October 31, 2024 Market Value (%) + Notional Market Value (%)¹ Key Rate Duration (yrs) Treasury 4.1 43.9 -0.09 Inflation-Linked 1.7 6-Month 0.0 0.06 Agency 0.1 0.9 Agency MBS 37.6 25.1 0.87 CMBS 7.5 2-Year
Slide 11: Corporate Bond Fundamentals
Corporate Bond Fundamentals Fundamentals remain strong Revenue Growth Uptick After Declining the Previous 8 Quarters Revenue - Overall YoY Growth Revenue - Overall (ex-Commodities) YoY Growth 25 20 15 Percent 10 5 0 -5 -10 1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 1Q19 3Q19 1Q20 3Q20 1Q21 3Q21 1Q22 3Q22 1Q23 3Q
Slide 12: US Agency Mortgages Offer Attractive High-Quality Yields
US Agency Mortgages Offer Attractive High-Quality Yields Most borrowers have limited refinancing incentives at current or lower rates Current Rate (6.16) % of Mortgage borrowers with Refi Incentive (right) 5,000 100% UMBS 30-yr Outstanding 4,000 80% (USD billions) 3,000 60% 2,000 40% 1,000 20% 0 0%
Slide 13: Select CMBS Exposures Present Attractive Relative Value Opportunities
Select CMBS Exposures Present Attractive Relative Value Opportunities CMBS Has Outperformed Corporate Credit YTD but Remains Historically Cheap Index Excess Return Year to Date 3 Years 30 20 18.70 Percent 8.81 10 4.45 2.59 1.91 2.00 3.59 0 -3.28 -10 AAA CMBS IG Corp BBB CMBS HY Corp AAA CMBS Spread
Slide 14: Questions & Answers
Questions & Answers OA GAS» 14 ‘WESTERN ASSET Nw %
Slide 15: Thank you.
Thank you. KC/ mB “cAWESTERN ASSET [x
Slide 16: Risk Disclosure
Risk Disclosure © Western Asset Management Company, LLC 2024. The information contained in these materials (“the materials”) is intended for the exclusive use of the designated recipient (“the recipient”). This information is proprietary and confidential and may contain commercially sensitive inform
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