Overview

The Eagle Asset Management Strategic Income Portfolio (SIP) is a risk-focused investment program designed to seek stable and growing income as well as the potential for capital appreciation. The Strategic Income Portfolio balances higher-yielding equity and fixed-income securities — Eagle offers two options: a SIP account with taxable bonds or a SIP account with tax-advantaged bonds — in an actively managed account. This is not simply a traditional balanced account with a relatively static ratio of stocks and bonds. Instead, Strategic Income is a dynamically managed portfolio utilizing the talents of Eagle's Equity Income and Fixed Income teams.

On the equity side, those holdings may include high-yielding common stocks, preferred stocks, convertible bonds and real-estate investment trusts (REITs). On the fixed-income side, potential holdings include government securities; asset- and/or mortgage-backed securities; investment-grade corporate bonds; closed-end high-yield bond funds; municipal general-obligation or revenue bonds; and exchange-traded funds (ETFs).

Investment Process

The Eagle Strategic Income Portfolio is a dynamically managed portfolio utilizing the talents of Eagle's Equity Income and Fixed Income teams. We anticipate the long-term allocation mix will approximate a 50-50 blend of stocks and bonds; however, allocations for either asset class may range from 35 percent to 65 percent. Typically, the cash level in the portfolio will not exceed 30 percent.

The team utilizes a number of economic factors to determine optimum stock and bond allocation. Indicators include Fed model, S&P 500 real dividend growth rate, real economic liquidity, stock/bond trend data, trader sentiment, interest-rate expectations and unemployment claims among others. Portfolio co-managers allocate assets based on analysis comparing the relative attractiveness of stocks vs. bonds. The team also collaborates to determine whether a company's stock or its debt is the most appropriate security for the portfolio.

Our Equity Income and Fixed Income managers gather regularly to determine the portfolio's equity/fixed-income allocation mix in an effort to optimize the risk/return opportunities from the available income securities. In addition, the managers meet to discuss bottom-up research on portfolio holdings and potential holdings.

The combined team's goal is to produce high levels of current and future income in dividend-producing stocks and a broad array of fixed-income securities while focusing on stability and participation in the long-term benefits of equity ownership. The single portfolio allows the investment co-managers to strategically adapt their asset-allocation posture to create what they view as the most favorable blend for clients given current economic factors.

The SIP option with tax-advantaged bonds may be of particular interest to those in higher income-tax brackets due to the preferential tax treatment of both dividends and municipals' interest income. The investment process for both SIP portfolios is identical; the only difference is in the composition of the bonds.

Portfolio Characteristics