News & Insights

Q4 2021 High Yield Market Update

Portfolio Manager Ray Kennedy reviews:

  • Performance drivers for the fourth quarter and year in 2021
  • Top reasons why we believe the high yield asset class remains attractive
  • Portfolio positioning and our assessment of high yield valuations, fundamentals, and technicals

 

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All investments contain risk and may lose value. This podcast is for general information only and should not be relied on for investment advice or recommendation of any particular security, strategy, or investment product.

Investment returns include reinvestment of dividends, interest and capital gains. Valuation is based on trade-date information. Net performance results are presented after actual management fees and all trading expenses but before custodial fees. The High Yield strategy’s returns for different time periods and market cycles can result in significantly different performance results. An account’s investment guidelines, timing of transactions, market conditions at the time of investment and other factors may lead to different performance results. The H&W High Yield composite, net of fees, and ICE BofA BB-B US High Yield Constrained Index through March 31, 2022: -3.45%, 1.14%, 3.82%, 5.42%, and -4.58%, -0.49%, 4.58%, 5.59% for 1Q22, one-, five-, and ten-years, respectively. Other performance disclosures are included in the strategy’s GIPS Report.

The portfolio manager’s views and opinions expressed in this podcast are as of January 18, 2022. Such views are subject to change and may differ from others in the firm, or the firm as a whole. The portfolio manager’s comments may include estimated and/or forecasted views, which are believed to be based on reasonable assumptions within the bounds of current and historical information. However, there is no guarantee that any estimates, forecasts or views will be realized. In the event of new information or changed circumstances, H&W reserves the right to change its investment perspective and outlook and has no obligation to provide revised assessments and opinions.

The portfolio manager’s views on the high yield market should not be construed as the high yield strategy’s expected performance. There is no guarantee of the future performance of the high yield market, nor the high yield strategy. H&W does not provide any assurance that the high yield strategy’s objectives and goals will be achieved. The High Yield strategy’s benchmark refers to the ICE BofA BB-B US High Yield Constrained Index. Unless otherwise noted, the high yield market refers to the ICE BofA US High Yield Index.

Any discussion or view of a particular company is as of the publication date but may be sold and no longer held in the High Yield strategy at any time, for any reason, without notice, subsequent to the publication date. The securities reflected herein are intended to be for illustrative purposes only and are not intended to be, and should not be construed as, investment recommendations or investment advice. Past performance of these securities, or any other investments, is not an indicator of future results.  H&W’s opinions regarding these securities are subject to change at any time, for any reason, without notice. No assurance is made that any securities identified, or all investment decisions by H&W were or will be profitable.

Investing in high yield securities is subject to certain risks, including market, credit, liquidity, issuer, interest-rate, inflation, and derivatives risks. Lower-rated and non-rated securities involve greater risk than higher-rated securities. Investments in debt securities typically decreases in value when interest rates rise. This risk is usually greater for longer-term debt securities. Investing in smaller and/or newer companies involves greater risks than those associated with investing in larger companies, such as business risk, significant stock price fluctuations and illiquidity.

Credit Quality weights by rating were derived from the highest bond rating as determined by S&P, Moody's or Fitch. The ICE BofA index data referenced is the property of ICE Data Indices, LLC (“ICE BofA”) and/or its licensors and has been licensed for use by Hotchkis & Wiley. ICE BofA and its licensors accept no liability in connection with its use. See Index definitions for full disclaimer.

Market Disruption: The global coronavirus pandemic has caused disruption in the global economy and extreme fluctuations in global capital and financial markets. H&W is unable to predict the impact caused by coronavirus pandemic, which has the potential to negatively impact the firm’s investment strategies and investment opportunities.

©2022 Hotchkis & Wiley. All rights reserved. No portion of the podcast may be published, reproduced, transmitted or rebroadcast in any form without the express written permission of H&W.

Past performance is not indicative of future performance.