- The strategy aims to provide income and capital growth by investing directly or indirectly in fixed and floating rate securities predominantly in pan-Europe
- Bottom-up analysis is at the forefront of the strategy’s investment process and is intended as the primary driver of performance whilst investment themes provide a top-down lens as the secondary driver
- The strategy is run by a multi-award winning portfolio manager, Michael Scott, who has an established track record of investing in high yield bonds1
- The strategy will use the ICE BofA European Currency High Yield Constrained Index2 for performance comparison purposes only
The investment team employ a bottom-up approach within a repeatable, data driven investment process. By seeking to avoid many of the risks that a large number of macro focused high yield funds are subject to, the team have a highly dynamic security selection process.
Bottom-up credit selection forms the focal point of the investment process and the investment team conducts a rigorous analysis of an issuer’s solvency and ability to meet its debt obligations before any investment is made. The team conduct in-depth research into issuers’ business models and assess multiple fundamental factors both on a historical and forward looking basis to derive how future credit quality may evolve.
Investment themes help to provide the top-down lens which bottom-up decisions are viewed through. These themes will be formed based on consideration of the macroeconomic backdrop as well as consumer trends, technology, demographics, regulation and other secular drivers that may impact the investment landscape at a regional, country, sector or issuer level.
The unconstrained remit of the strategy provides the portfolio manager with the freedom to avoid unwanted risk concentrations by region, currency or sector that exist from time to time in credit benchmarks.
This repeatable and iterative process is designed to build both a high conviction yet diversified portfolio through active management, with the aim of delivering attractive risk adjusted returns and consistent alpha through all market conditions.
|Asset Class||Fixed Income|
The entry point offered by current spread levels and valuations offers attractive long-term potential for high yield, in our view.
Opportunity is everywhere, in our view, especially for an actively managed high yield bond portfolio, which may offer investors a number of benefits throughout the business cycle.
With a changing monetary policy direction, entrenched inflation and increasing pressures on many businesses, high yield investors must be judicious in their stock picking in 2022.
All of the classic signs of late-cycle euphoria are on display: accelerating inflation, rising interest rates, over-payment for assets, a glut of issuance. So how should high yield investors prepare themselves if the credit cycle ends?
Man offers a comprehensive suite of investment solutions and formats that can be tailored and optimised to meet specific client needs. Our investment solutions offer optionality including: liquidity, control, investment restrictions, investor customisations and transparency.
Access to investment products and mandate solutions are subject applicable laws and regulations including selling restrictions and licensing requirements. Investment solutions listed above may not be compatible for all investment strategies and may be subject to minimum subscription requirements. Regional Funds: In additions to UCITS and AIFs registered across the EEA, a number of investment strategies are available in vehicles registered in Chile, Netherlands, Hong Kong, Japan, Singapore, South Korea and Switzerland.
2. The ICE BofA European Currency High Yield Index is an official benchmark for this strategy.
One should carefully consider the risks associated with investing, whether the strategy suits your investment requirements and whether you have sufficient resources to bear any losses which may result from an investment:
Investment Objective Risk - There is no guarantee that the Strategy will achieve its investment objective.
Market Risk - The Strategy is subject to normal market fluctuations and the risks associated with investing in international securities markets and therefore the value of your investment and the income from it may rise as well as fall and you may not get back the amount originally invested.
Counterparty Risk - The Strategy will be exposed to credit risk on counterparties with which it trades in relation to on-exchange traded instruments such as futures and options and where applicable, ‘over-the- counter’("OTC","non-exchange") transactions. OTC instruments may also be less liquid and are not afforded the same protections that may apply to participants trading instruments on an organised exchange.
Currency Risk - The value of investments designated in another currency may rise and fall due to exchange rate fluctuations. Adverse movements in currency exchange rates may result in a decrease in return and a loss of capital. It may not be possible or practicable to successfully hedge against the currency risk exposure in all circumstances.
Liquidity Risk - The Strategy may make investments or hold trading positions in markets that are volatile and which may become illiquid. Timely and cost efficient sale of trading positions can be impaired by decreased trading volume and/or increased price volatility..
Financial Derivatives - The Strategy will invest financial derivative instruments ("FDI") (instruments whose prices are dependent on one or more underlying asset) to achieve its investment objective. The use of FDI involves additional risks such as high sensitivity to price movements of the asset on which it is based. The extensive use of FDI may significantly multiply the gains or losses.
Leverage - The Strategy's use of FDI may result in increased leverage which may lead to significant losses.
Non-Investment Grade Securities - The Strategy may invest a significant proportion of its assets in non-investment grade securities (such as “high yield” securities) are considered higher risk investments that may cause income and principal losses for the Strategy. They are instruments which credit agencies have given a rating which indicates a higher risk of default. The market values for high yield bonds and other instruments tend to be volatile and they are less liquid than investment grade securities.
Total Return - Whilst the Strategy aims to provide capital growth, a positive return is not guaranteed over any time period and capital is in fact at risk.