4Q2023 - Credit Opportunities Commentary
Leveraged credit markets ended 2023 on a high note. The recent rally among risky assets, including high yield bonds and leveraged loans, erased some of the memories of what was a tumultuous year.
Read the full commentary & disclosures here
- The Polen Credit Opportunities Full Discretion Composite generated positive returns yet underperformed the ICE BofA U.S. High Yield Index (the “Index”) in the fourth quarter.
- High yield bonds and leveraged loans produced gains in the last quarter of 2023, with high yield bonds outperforming their floating rate peers. Milder inflation and dovish Federal Reserve rhetoric helped drive interest rates meaningfully lower, which benefited high yield bonds.
- In Q4, U.S. Treasury yields moved materially lower. As a result, the shorter duration of the Credit Opportunities Full Discretion representative portfolio (the “Portfolio”) relative to the Index detracted from performance.
- Leveraged credit markets ended 2023 on a high note. The recent rally among risky assets, including high yield bonds and leveraged loans erased some of the memories of what was a tumultuous year.
- As we head into 2024, we maintain a constructive view of the high yield bond and leveraged loan markets.
- Although we anticipate volatility during the upcoming year, we believe current yield levels are attractive and more than compensate investors for the increased risk.
Image
