Q. Legg Mason Opportunity Trust makes up the bulk of my investment portfolio. Will this fund continue to do well going forward?
T.D., via the Internet
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A. It should play only a small supporting role in your overall portfolio, not receive star billing.
This rough-and-ready investment doesn’t provide a lot of diversification and often makes large bets on individual stocks. It holds between 20 and 30 positions, investing in both debt and equity instruments.
The stock sectors this fund emphasizes can change frequently, making it difficult to figure exactly how it fits in your overall mix at a given time.
The $1.87 billion Legg Mason Opportunity Trust (LMOPX), created Dec. 30, 1999, and run by William H. Miller III, has declined 15 percent over the past 12 months. That ranks in the lowest one-tenth of all funds that blend growth and value strategies.
“Legg Mason Opportunity Trust tends to drop a lot further in certain types of markets and can bounce back a lot faster, too, but it’s a fairly high-risk play that can be very volatile,” said Christopher Traulsen, senior analyst with the Morningstar Inc. research firm.
However, Miller is a highly respected manager with 17 years of strong performance in running Legg Mason Value Trust (LMVTX). While that provides some hope for the future of this newer fund, you still shouldn’t bet the ranch on it.
Legg Mason Opportunity Trust’s heaviest concentrations are in financials, services and technology.
The fund requires a 1 percent “load” and a $1,000 minimum initial investment.
Q. When my wife and I retire and apply for Social Security benefits, how are they calculated?
R.O., Berwyn.
A. The Social Security Administration looks at your work history, computing your benefits based on how much you earned and paid into Social Security over your lifetime.
The highest 35 years of earnings are used. You’ll fill out an application and look over your earnings record to make sure it’s correct.
“We add up those 35 years and compute average monthly earnings over your lifetime,” said Mark Hinkle, an executive with the Social Security Administration in Baltimore, Md.
However, there’s also a weighted formula that gives a benefit to lower wage earners who haven’t had a chance to save as much as a higher wage earner could have, he added.
Each year the administration sends out a statement to workers 25 years of age or older who aren’t receiving a Social Security benefit. It lists all earnings and gives estimates for retirement, disability and survivor benefits at ages 62 (early retirement) and 65 (full retirement).
Three months before you wish to start receiving benefits, contact the Social Security Administration at 800-772-1213 or at www.ssa.gov.
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Andrew Leckey answers questions Sunday in Business and Tuesday in Your Money. Address inquiries to Andrew Leckey, P.M.B. 184, 369-B Third St., San Rafael, Calif. 94901-3581, or e-mail andrewinv @aol.com.