High Yield Bonds
Bank Loans
Investment Grade 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 07/31/2015

Not Rated

Portfolio Details as of 07/31/2015

Total Net Assets
$4.11 B
Number of Holdings
Average Coupon
Average Maturity
6.74 Years
Effective Duration
4.77 Years

Portfolio Positioning as of 06/30/2015

  • Despite the volatility in the credit markets during the first half of 2015, credit fundamentals remain favorable, and are supported by low interest rates, which have contributed to default rates running well below longer-term norms. This favorable credit environment, combined with an improving U.S. macroeconomic outlook, should continue to sustain valuations in the high-yield asset class.
  • The portfolio has overweight positions, relative to its benchmark, the BofA Merrill Lynch U.S. High Yield Constrained Index, in consumer-oriented sectors, including food–wholesale, specialty retail, gaming, and restaurants. We targeted these sectors, and certain companies within them, as beneficiaries of increased consumer spending resulting from savings due to the decline in energy prices.
  • The portfolio currently is underweight ‘BB’ rated bonds relative to its benchmark due to tight valuations and the relatively high interest-rate sensitivity of this segment of the credit quality spectrum. The portfolio has a slight overweight position in ‘CCC’ rated credits; although valuations also are relatively tight in this segment of the credit quality spectrum, it is less sensitive to rising interest rates, and we believe that the improving U.S. economic environment warrants this position.
  • As of quarter-end, the portfolio had modest allocations in out-of-index sectors, such as bank loans, convertibles, investment-grade bonds, and equities, as we found opportunities that offer attractive risk/reward profiles, while also providing additional portfolio diversification and reducing the interest-rate sensitivity of the portfolio.
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