4Q2023 - Credit Opportunities Fund 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 Fund (the “Fund”) returned 3.79% but 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. The Fund’s shorter duration relative to the Index resulted in a negative duration effect; however, the Fund’s income advantage relative to the Index provided some positive offset.
- Polen Capital did not make any significant changes to Fund positioning during the quarter. Notably, however, we initiated a position in a leading manufacturer for the aerospace industry.
- 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.
- Although we anticipate volatility during the upcoming year, we believe current yield levels are attractive and more than compensate investors for the increased risk.
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