High Yield Bonds
Equity
Bank Loans
Investment Grade Bonds
Convertibles
Other
Cash
S.T & N.O.A
1 - 5 YEARS
6 - 10 YEARS
11 - 20 YEARS
21 - 30 YEARS
31 + YEARS
PFD(EQUITY)

Credit Quality Distribution as of 03/31/2015

BBB
BB
B
CCC
<CCC
Not Rated

Portfolio Details as of 03/31/2015

Total Net Assets
$4.25 B
Number of Holdings
672
Average Coupon
6.92%
Average Maturity
6.77 Years
Effective Duration
4.50 Years

Portfolio Positioning as of 03/31/2015

  • Despite the volatility in the credit markets during the first quarter 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 demand for investments that provide incremental yield over U.S. Treasuries, should continue to sustain the long-term performance of the high-yield asset class.
  • The portfolio, relative to its benchmark, the BofA Merrill Lynch U.S. High Yield Constrained Index, currently has an underweight position in the telecom and financial services sectors. We believe that the competitive price environment of the telecom sector and the tight valuations of the financial services sector warrant these underweight positions.
  • Spreads narrowed over the course of the quarter, and are once again below their long-term averages. We still see the possibility for capital appreciation through spread tightening, though less so than at the beginning of 2015. We will continue to focus on security selection within our favored sectors and industries.
  • 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.  
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