News & Insights

Q2 2022 High Yield Market Update

Portfolio Manager Patrick Meegan provides an update on:

    • Q2 2022 portfolio performance & positioning
    • Our assessment of recession risks, spreads, and debt maturities
    • The high yield team’s market outlook

 

________________________________________

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.

The portfolio manager’s views and opinions expressed in this podcast are as of August 4, 2022. Such views are subject to change without notice 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. The podcast may also contain views that are forward-looking statements. Due to various risks and uncertainties, actual events/results or the performance of the High Yield strategy may differ materially from those reflected or contemplated in such forward-looking statements.

The securities highlighted in this podcast are intended to be for illustrative purposes only. Any discussion or view of a security, an asset class/segment, industry/sector and/or investment type are not investment recommendations, should not be assumed to be profitable, and are subject to change without notice. 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/or opinions.

Quarter-to-date through June 30, 2022 the H&W High Yield composite, net of fees, ICE BofA BB-B U.S. High Yield Constrained Index, and ICE BofA U.S. High Yield Index generated returns of -9.70%, -9.50% and -9.97%, respectively. The strategy’s holdings and attribution analysis are based on a representative portfolio of the High Yield strategy, which may vary by portfolio due to different restrictions, cash flows, and other relevant considerations. Performance attribution is an analysis of the portfolio's return (gross of fees) relative to the benchmark, is calculated using trade information, and does not reflect cash flow transactions and the payment of transaction costs, fees and expenses.

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 U.S. High Yield Constrained Index. Unless otherwise noted, the high yield market refers to the ICE BofA U.S. High Yield Index.

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.