High Yield Fixed Income
Strategic Issue High Yield Strategy
The Strategic Issue High Yield Strategy aims to generate returns in excess of the broad high yield market with lower volatility over a full economic cycle.
Strategy Overview
- Emphasis on smaller issues (<$550m)>
- Limited/no exposure to CCCs
- Focus on capital structure issues and relative value
Investment Philosophy
- Income is the dominant source of return
- Quality reduces volatility and helps preserve capital
- Independent research is the key to identifying the most attractive relative values
Key Facts (as of 12.31.2024)
| Strategy Inception | August 1, 2018 |
| Benchmark | ICE BofA HY Cash Pay Index |
| Investment Vehicles | Separate Account |
| Range of Holdings (Issuers) | 70-100 |
| Total Net Assets | $55M |
| Annualized Turnover | 49.5% |
| Yield to Maturity | 7.79% |
| Effective Duration | 2.95 yrs. |
| Average Quality | B1 |
| Yield | 7.16% |
ICE Bank of America (ICE BofA) US Cash Pay High Yield Index: is an unmanaged index used as a general measure of market performance consisting of fixed-rate, coupon-bearing bonds with an outstanding par which is greater than or equal to $50 million, a maturity range greater than or equal to one year and must be less than BBB/Baa3 rated but not in default.
Bloomberg Fixed Income Indices (the “Indices”) are trademarks or service marks of Bloomberg Finance L.P. Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited, the administrator of the Indices (collectively, “Bloomberg”) or Bloombergʼs licensors own all proprietary rights in the Indices. Bloomberg does not guarantee the timeliness, accuracy or completeness of any data or information relating to the Indices.
Core Fixed Income Investment Team
Risk Considerations: Historically, bonds have indeed provided less volatility and less risk of loss of capital than has equity investing. However, there are many factors which may affect the risk and return profile of a fixed income portfolio. The two most prominent factors are interest-rate movements and the creditworthiness of the bond issuer. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise. The risk of a change in the market value of the investment due to changes in interest rates is known as interest-rate risk. Interest-rate risk is subject to many variables but may be analyzed based on various data (e.g., effective duration). The risk that the issuer may default on interest and/or principal payments is often referred to as credit risk. Credit risk is typically measured by ratings issued by ratings agencies such as Moody’s and Standard & Poor’s. A credit rating of a security is not a recommendation to buy, sell or hold the security and may be subject to review, revision, suspension, reduction or withdrawal at any time by the assigning Rating Agency. Ratings and insurance do not remove market risk since they do not guarantee the market value of the bond. Bonds issued by the U.S. Government have significantly less risk of default than those issued by corporations and municipalities. However, the overall return on Government bonds tends to be less than these other types of fixed-income securities. Finally, reinvestment risk is the possibility that the proceeds of a maturing investment must be invested in a lower yielding security, all other things held constant, due to changes in the interest-rate environment. Investors should pay careful attention to the types of fixed-income securities which comprise their portfolio, and remember that, as with all investments, there is the risk of the loss of capital.