1Q2024 - Credit Opportunities Commentary

Stubborn inflation and resilient economic growth led to lower forecasts for U.S. Federal Reserve rate cuts in 2024, which drove interest rates higher. Credit spreads tightened for high yield bonds and leveraged loans, contributing to lower-rated credits' outperformance.

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  • During the first quarter of 2024, the Polen Credit Opportunities Full Discretion Composite returned 3.66% gross and 3.38% net of fees versus the 1.51% return of the ICE BofA U.S. High Yield Index (the “Index”).
  • High yield bond and leveraged loan markets tightened in the face of increasing U.S. Treasury yields and continued domestic and geopolitical angst.
  • We made no significant changes to portfolio positioning in the Credit Opportunities Full Discretion representative portfolio (the “Portfolio”); however, we exited our position in Tekni-Plex and redeployed the proceeds into more compelling opportunities.
  • The top contributors to the Portfolio’s absolute performance over the first quarter were Aveanna Healthcare and Duravant.
  • The most significant detractors from absolute performance were American Tire Distributors and Asurion.
  • We view the current environment as favorable for an active approach like ours to capitalize on the best relative value opportunities across the leveraged credit market, regardless of credit rating.

Read the full commentary & disclosures here 

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