High Yield Bonds
S.T & N.O.A
1 - 5 YEARS
6 - 10 YEARS
11 - 20 YEARS
21 - 30 YEARS
31 + YEARS

Credit Quality Distribution as of 08/31/2015

Not Rated

Portfolio Details as of 08/31/2015

Total Net Assets
$745.44 M
Number of Holdings
Average Coupon
Average Maturity
8.97 Years

Portfolio Positioning as of 06/30/2015

  • During the second quarter of 2015, we maintained the portfolio’s equity-sensitivity at a level generally in-line with that of the broader convertible market. Late in the quarter, fixed income securities faced headwinds as credit spreads widened from April’s relatively tight levels.
  • We increased the portfolio’s allocations to the consumer discretionary and technology sectors. We believe the improving U.S. employment numbers and better U.S. economic data is supportive of a resurgent U.S. consumer.  In the technology sector, we maintain a positive bias towards software, particularly companies that deal in cyber-security.  Firms that can protect sensitive data are becoming critically important to entities in both the public and private sectors, and we expect them to continue growing their share of global technology expenditure.    
  • We continue to be positively disposed to the health care sector, particularly biotech and specialty pharmaceutical companies with late stage pipelines and near-term revenue acceleration. The acceleration in M&A within the sector has driven valuations higher in the first half of this year, and we expect this to persist over the immediate term. However, we continue to find opportunities in convertibles of companies with good assets and that are trading at reasonable valuations. 
  • Convertible security issuance remains strong as the first half of 2015 featured $26 billion of new issues in the U.S market according to Bank of America Merrill Lynch. We have seen a shift this year towards larger-cap issuers, primarily as a means to partially finance acquisitions. Looking ahead, we expect convertibles issuance to continue to benefit so long as the robust M&A environment persists. We are also monitoring the more troubled parts of the corporate debt markets, such as the energy and materials sectors, and expect companies to eventually turn to the convertibles market for lower cash rates of interest.
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