High Yield Corporate Bonds

Strategy Overview

Account Minimum: $100,000* | Launch of Strategy: April 1, 1989

For investors seeking potentially greater returns, this strategy focuses on the upper tier of the High Yield credit curve (BA & B). Securities rated CAA and lower are not eligible for purchase. Our objective is to achieve greater returns than might be available in the investment grade universe while avoiding the greater risk associated with lower credit quality securities (CAA and lower).

The portfolio management team employs a value approach whereby we purchase only U.S. dollar denominated corporate bonds and seek those that we feel are undervalued. Preservation of capital is considered essential to the objective of the portfolio, which is total return over a full market/economic cycle.

We access over 30 institutional broker/dealers seeking competitive bids and offerings. This trading network provides all of our clients with best pricing. A strict sell discipline is employed within the strategy.

Portfolio Statistics

(as of 9/30/2024)

wdt_ID	name	value
1	Average Maturity	4.90
2	Duration	3.50
3	Coupon	5.62%
4	Yield to Maturity	6.04%
5	Current Yield	5.74%
6	Target Diversification	33-40 Issues
7	Average Credit Rating	B1

Resources

Bottom-Up Approach

Identify investment opportunities that represent the most attractive value, with strong prospects for consistent income and growth.

Minimize Overall Volatility

Focused on the upper tier of the High Yield credit curve (BA-B), as well as the conservative portion of a firm’s capital structure (Senior Subordinated Debentures) and CAA rated securities are not eligible for purchase.

Established companies & industries

Emphasis on established industries leads us to avoid sectors that have precarious operating profiles.

Enhanced Liquidity & Safety

By investing only in bonds with an initial issue size generally in excess of $100,000,000.

Diversified

The portfolio is diversified across more than 35 issues and the industry group (a subset of sector) concentration is approximately 12%.

Low Turnover

Historical low turnover of the portfolio, on average less than 45% per year.

Strategy Data

Calendar Year Returns (Gross)

Annualized Returns

(period ended 9/30/2024)

wdt_ID	Period	CAM Gross	CAM Net of Fees	Bloomberg US Corporate High Yield Index
1	YTD	6.53	6.30	8.00
2	1 Year	14.78	14.44	15.74
3	3 Years	1.49	1.19	3.10
4	5 Years	3.59	3.29	4.72
5	10 Years	3.36	3.03	5.04
6	Inception	6.64	6.15	7.58

Risk Statistics

(period ended 9/30/2024)

wdt_ID	Period	Standard Deviation CAM HY (%)	Standard Deviation Bloomberg High Yield Index (%)	Sharpe Ratio CAM HY	Sharpe Ratio Barclays High Yield Index
1	3 Yrs.	9.33	8.72	-0.24	-0.06
2	5 Yrs.	9.83	10.45	0.13	0.23
3	10 Yrs.	8.08	8.51	0.21	0.40
4	Inception	7.77	9.76	0.48	0.47

Annualized Returns

(period ended 9/30/2024)

Risk Statistics

(period ended 9/30/2024)

Maturity Distribution

Industry Distribution

Credit Quality Distribution

wdt_ID	Type	Value
1	AAA	0.0
2	AA	0.0
3	A	0.0
4	BAA	5.2
5	BA	68.8
6	B	23.7
7	CAA	2.3
8	CA	0.0
9	< C	0.0
10	NR	0.0

*Bloomberg Index Ratings

MONTHLY RETURN CORRELATIONS (SINCE 1984)

(as of 12/31/2023)

	High Yield	X-Over	U.S. Credit	S&P 500	EM*	Govt	U.S. Agg	Ba	B	Caa
Crossover	0.92
Credit	0.57	0.73
S&P 500	0.63	0.63	0.36
EM	0.63	0.63	0.56	0.55
Govt	0.22	0.35	0.84	0.14	0.31
Agg	0.34	0.49	0.91	0.21	0.40	0.96
Ba	0.94	0.98	0.68	0.62	0.62	0.19	0.31
B	0.99	0.88	0.54	0.62	0.62	0.19	0.31	0.91
Caa	0.90	0.77	0.38	0.56	0.54	0.04	0.14	0.78	0.88
Lev. Loans	0.77	0.73	0.37	0.48	0.44	-0.09	0.04	0.73	0.74	0.79

*EM since 1994

Source Bloomberg Research and Indices