Inflation Protection: 8% Yield and 11% Discounted Inflation Protection in Western Asset Infl-Linked Opps & Inc Fd

Western Asset Infl-Linked Opps & Inc Fd (WIW) is a fund that offers an 8%-plus yield and 11% discounted inflation protection. The investment was made in response to rising inflation forecasts due to ongoing tariff wars, which have contributed to a potential increase in prices in 2025.

Western Asset Infl-Linked Opps & Inc Fd (WIW) has captured the attention of investors seeking high yields and inflation protection amidst escalating tariff wars. The fund, which offers an 8%+ yield and an 11% discount on inflation protection, was invested in response to rising inflation forecasts for 2025. This closed-end fund (CEF) provides a unique opportunity for income-focused investors to hedge against inflation risks.

WIW, launched on February 27, 2004, has a leveraged portfolio investing at least 80% in inflation-linked securities, with the ability to invest in other fixed-income assets such as high-yield, emerging markets, structured products, commodities, and currency. The fund's primary objective is to generate current income, with capital appreciation as a secondary objective. As of March 31, 2025, WIW had $592M in net assets, with 144 holdings and an average daily volume of 229K shares [1].

The fund's portfolio is primarily investment grade, with 85% in AA securities, 2.11% in AAA, 2.11% in A, and 4.92% in BBB. The U.S. represents the largest exposure at 129.54%, followed by Brazil at 2.98% and Mexico at 1.94%. The fund holds a mix of maturities, with 37.26% in 3-5 year maturities, 21.89% in 1-3 years, 15.51% in 7-10 years, 14.5% in 15-20 years, and 11.12% in 20-30 years. The portfolio's duration is 7.54 years [1].

As of June 13, 2025, WIW was trading at an 11.46% discount to its net asset value (NAV), making it an attractive option for investors seeking income. The fund's monthly dividend yield was 8.77% at the intraday price of $8.55. The base dividend/share grew by an average of ~13.76% over the past five years, and its total annual dividends grew by an average of 38.75% [1].

The fund's performance has been impressive. As of March 31, 2025, WIW outperformed the Bloomberg US Government Inflation-Linked 1-10 year index on a price basis by 11% over the past year, compared to 6% for the index. Over the past five and ten years, the fund also outperformed the index, although it underperformed since inception on a NAV basis over the past year and three-year periods [1].

Risks associated with the fund include interest rate, credit, inflation, and reinvestment risks, as well as possible loss of principal. Additionally, the fund's leverage ratio of 31% contributes to a higher expense ratio of 3.57%. Liquidity risk, currency fluctuations, and social, economic, and political uncertainties in international investments are also factors to consider [1].

Investors should note that fixed income securities, particularly those with high leverage, can be more volatile. The fund's discount to NAV, while attractive, could also indicate underlying risks. It is essential to conduct thorough due diligence before investing.

References:
[1] https://seekingalpha.com/article/4794748-wiw-8-percent-plus-yield-11-percent-discounted-inflation-protection
[2] https://seekingalpha.com/article/4794771-wiw-inflation-bond-cef-8-7-percent-distribution-minus-11-5-percent-discount-to-nav