Polen Capital’s John Sherman joined Citywire for an in-depth discussion of the high yield market, offering his perspective on spreads, defaults, and liquidity. He explains how the high yield space has evolved and how the Polen approach seeks to take advantage of the compelling investment opportunities available.
We’ve always viewed bonds and loans as one asset class. We like our analysts to look across both spaces to find opportunities.
—John Sherman, Portfolio Manager, U.S. High Yield
Panel Discussion Highlights
- Structural changes: why we believe the high yield space, especially with its recent increase in higher-rated securities, is so attractive (7:20)
- Fallen angels: what history leads us to expect during a recessionary environment (8:41)
- Bank loans: why the combination of elevated absolute yields, the potential for price appreciation, and observed recovery rates improve the risk/reward profile for loans, in our view (15:40)
- Liquidity trends: the impact of collateralized loan obligations (CLOs) on market liquidity (18:45)
- Market inefficiencies: why we focus on the middle market and take a unified approach toward bonds & loans (26:02)
- Active mindset: the three keys for an active, buy-and-hold investor in high yield (36:39)
Please note that this document is a condensed summary of the full roundtable interview conducted by Citywire.
This information is provided for illustrative purposes only. Opinions and views expressed are as of the date of this roundtable and may involve a number of assumptions and estimates which are not guaranteed and are subject to change without notice or update. Although the information and any opinions or views given have been obtained from or based on sources believed to be reliable, no warranty or representation is made as to their correctness, completeness, or accuracy. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice, including any forward-looking estimates or statements which are based on certain expectations and assumptions. The views and strategies described may not be suitable for all clients. This document does not identify all the risks (direct or indirect) or other considerations which might be material to you when entering any financial transaction.
Active Management: an approach to investing where an investor, a professional money manager, or a team of professionals is tracking the performance of an investment portfolio and making buy, hold, and sell decisions about the assets in it.