3Q2025 - U.S. Opportunistic High Yield Commentary
This quarter was marked by multi-year record lows for below investment-grade yields and spreads, alongside record-high capital market activity in leveraged credit assets.
- The Polen Credit U.S. Opportunistic High Yield Composite (the “Composite”) underperformed both the ICE BofA U.S. High Yield Index and the S&P UBS Leveraged Loan Index (net of fees) in the third quarter.
- Dexko Global and Aveanna Healthcare contributed the most to total returns, while SportsNet New York and Medical Solutions were the largest detractors during the quarter.
- Over the period, we reduced our exposure to floating rate positions and added fixed rate securities. With strong relative value opportunities present in both the primary and secondary markets, we increased the number of positions in the Portfolio.
- Our primary concerns today are much of the same as in the first half of the year, including continued market volatility, spread widening, and the Fed’s policy moves, potentially in response to ongoing trade wars and geopolitical risks.
- In our view, remaining patient and not overreaching for yield will leave our portfolios well positioned to take advantage of compelling opportunities in this period of instability.