Key characteristics: • Differentiated research framework • Business cycle-based investment approach • Experienced team, consistent process
High Yield and Bank Loans Overview
Aegon AM US manages high yield and bank loan strategies with a time-tested investment approach, the benefits of which are evident in their consistent relative long-term performance, risk-adjusted returns and results in down markets.
Our flagship High Yield Fixed Income strategy launched more than two decades ago. Since then, the firm has introduced several US and global high yield strategies to meet a variety of outcomes. The strategies are managed with a relative value-oriented and opportunistic total return style.
The firm's bank loan experience ranges from managing institutional bank loan portfolios as well as constrained collateralized loan obligations (CLOs). The bank loan strategies are managed with a risk-focused mindset and opportunistic total return style.
Aegon AM US High Yield & Bank Loan Strategies
|High Yield Fixed Income||$8,172 million||June 1, 1997|
|Short Duration High Yield||$111 million||January 1, 2017|
|Global High Yield||$128 million||October 1, 2015|
|High Yield ESG
||$171 million||March 1, 2019|
|High Yield & Bank Loan Opportunities||$52 million||October 1, 2014|
|Bank Loans||$87 million||January 1, 2014|
|Bank Loans CLO||$3,809 million||January 1, 2000|
*As of June 30, 2020
High yield and bank loan strategies are managed according to three main guiding principles. We believe:
- Security selection is typically the primary driver of return, requiring a multi-faceted research process that combines industry expertise with distressed and loan research capabilities.
- Unexpected changes in the business cycle create significant market dislocations. Top-down market insights may provide an edge for bottom-up security selection that incorporates risk oscillation at market inflections and sector rotations.
- Broad diversification mitigates risks associated with individual credits. To effectively manage liquidity and market risk, we believe a portfolio must be diversified across a number of issues, industries and credit tiers.
The high yield and bank loan strategies employ a fundamental, bottom-up credit research investment process, which is complemented by proprietary top-down macroeconomic analysis and risk monitoring. This disciplined bottom-up approach emphasizes the analysis of fundamentals, valuation, sentiment and technicals.
The team's research team structure, long-term investment focus, and risk-informed process differentiate its high yield and bank loan strategies from peers, specifically in the following three key areas:
- Seasoned, cross-coverage credit research team and dedicated distressed research capability: The traditional Credit Research team is structured for analysts to cover companies across the credit spectrum, from investment grade to high yield, including bond and loan issuers. This approach provides consistent research coverage of a credit when rating transitions occur. The research team's cross-coverage structure allows analysts to potentially identify opportunities to take advantage of dislocations that may occur as fallen angels leave the investment grade market. Additionally, dedicated Bank Loan research provides an asset class focus and expands the research coverage to loan-only issuers.
Additionally, the firm's dedicated Distressed Research team possesses a thorough understanding of corporate restructurings and has extensive experience leading creditor groups through highly complex bankruptcies. Portfolio managers can draw on the team's expertise to help to mitigate risk in existing holdings and uncover attractive opportunities.
- Business cycle-informed portfolio management approach: The High Yield team believes unexpected changes in business cycles create market dislocations and potential investment opportunities. Portfolio managers incorporate insight from the firm’s top-down global house view process in an attempt to anticipate market inflection points, adjusting business cycle assumptions in partnership with the research team to identify emerging investment opportunities. The team’s willingness to play in all parts of the high yield market, from defensive to aggressive sectors and structures, may afford them the ability to capitalize on these market dislocations.
- Experienced team, consistent process and risk-focused mindset: The portfolio management team has experience navigating business and credit cycles with an acute focus on risk management. Adhering to a disciplined and repeatable process, the team uses their experience, combined with a risk-focused mindset, to navigate market dislocations in pursuit of competitive risk-adjusted returns. The team collaborates with research analysts, other portfolio managers and risk analysts to assess downside risk, identify potential causes and implications, and factor this information into the investment decision-making process.