Podcast: Macro Conditions are Creating Opportunities for High Yield
John Sherman, the lead portfolio manager for Polen’s Bank Loan strategy and co-portfolio manager for both the U.S. Opportunistic High Yield and the Credit Opportunities strategies, sat down on April 1 with ION Analytics’ Giovanni Amodeo to talk about how macroeconomic conditions are creating opportunities in the high yield space.
Highlights:
- John emphasizes that recent market volatility, reminiscent of the 2012 Euro Debt Crisis, is driving a shift in sentiment and forcing investors to reconsider their allocations.
- John believes in maintaining a long-term strategic plan and cautions against market timing, recommending periodic rebalancing between equities and fixed income, especially in high yield and leveraged loans.
- John sees opportunities in the current high yield and loan markets, citing attractive spreads and improved credit quality, and stresses the importance of avoiding companies in secular decline. In his view, credit risk is more attractive than it has been in 20 years.
- They discuss the challenges, such as GDP growth and higher interest costs, which affect deal activity and M&A, while investor nervousness increases amid market fluctuations. John highlights the growing trend of consolidation among asset managers and believes mid-sized firms are well-positioned for growth in this environment.
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