The high yield and floating rate loan markets are large and growing markets, with what we see as attractive opportunities for active managers who are able to look for value and identify potential mis-priced securities.
1 High yield market size of $1,588 billion, Acciavatti, Peter D., Tony Linares, Nelson Jantzen, CFA, Rahul Sharma, and Chuanxin Li. “Credit Strategy Weekly Update.” J.P. Morgan, North American High Yield and Leveraged Loan Research. April, 4, 2014, p. 43. The Leveraged Loan Market Size of $1,527 billion as of 3/31/14, Blau, Jonathan, James Esposito, and Daniyal Khan, “Leveraged Finance Strategy Weekly,” Credit Suisse Global Leveraged Finance, June 27, 2014, p. 25.
2 Total U.S. Corporate Debt market size (figures for fixed income asset classes other than high yield and leveraged loans) sourced from SIFMA, “Outstanding U.S. Bond Market Debt,” as of 3/31/14.
3 Barclays Capital U.S. High Yield Index covers the universe of fixed rate, non-investment grade debt (source Barclays Capital). U.S. 5 Year Treasury Note is the on-the-run Treasury (source U.S. Treasury). Barclays Corporate Investment Grade Index consists of publicly issued U.S. corporate and specified foreign debentures and secured notes that meet the specified maturity, liquidity, and the quality requirements (source Barclays Capital). Barclays Municipal Bond Index covers the long-term, tax-exempt bond market (source Barclays Capital). All data as of 9/11/14.
This article was written by Tim Gramatovich, CFA, CIO for Peritus Asset Management, the sub-advisory firm of the AdvisorShares Peritus High Yield ETF (HYLD).