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

Credit Quality Distribution as of 02/27/2015

Not Rated

Portfolio Details as of 02/27/2015

Total Net Assets
$802.48 M
Number of Holdings
Average Coupon
Average Maturity
7.40 Years

Portfolio Positioning as of 12/31/2014

  • As credit spreads widened during the quarter, we decreased our degree of equity sensitivity.  While the cost of debt financing remains low due to lower interest rate levels, we will continue to monitor the availability of credit in particular sectors of the market. 
  • We increased our exposure to the materials sector, and in particular, the aluminum and steel industries.  Capacity is being rationalized and firms are improving their cost structures in order to better withstand volatility of commodity prices in the future.  We are also slowly increasing our underweight to the energy sector as we believe the credits and equities of some producers have been overly penalized relative to the liquidity they can generate via spending cuts and asset sales.   
  • We continue to reduce our portfolio’s allocation to more equity-like securities, particularly within the health care sector where some valuations have reached price objectives. Proceeds from these sales are being redeployed into securities that are trading closer to their bond values, resulting in a more balanced overall portfolio. 
  • Convertible issuance in 2014 remained healthy, with nearly $50 billion in gross issuance along with net positive new issuance.  Much like in 2013, there were many companies issuing convertible securities for the first time. These issuers are attracted to the low cash interest cost relative to straight debt as well as the partial insulation from stock dilution that the convertible structure provides.  The recent spread widening seen in the high yield market should also provide a tailwind to continued growth in convertible issuance.  
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