We believe that the best approach to credit investing is to be agnostic on the credit ratings. This ratings agnosticism is central to our investment philosophy and process. We believe that inefficiencies created by credit ratings have created an opportunity for those willing to step down on the ratings spectrum. Investors need to do their own homework, undertaking their own fundamental and valuation analysis to determine the viability of a credit and when to buy and sell, rather than just taking the rating agencies’ word for it and trading accordingly.
Credit ratings are not going away, as they are too ingrained in the system. And frankly, we feel that is to our benefit. Be it those that focus only investment grade or higher rated non-investment grade bonds, we will take advantage of others who blindly rely on these ratings to make investment decisions or who have investment policies that restrict investing in certain ratings category. We believe arbitrary restrictions inhibit investment results.
Although information and analysis contained herein has been obtained from sources Peritus I Asset Management, LLC believes to be reliable, its accuracy and completeness cannot be guaranteed. Information on this website is for informational purposes only. As with all investments, investing in high yield corporate bonds and loans and other fixed income, equity, and fund securities involves various risk and uncertainties, as well as the potential for loss. Past performance is not an indication or guarantee of future results.
This article was written by Heather Rupp, CFA, Director of Research for Peritus Asset Management, the sub-advisory firm of the AdvisorShares Peritus High Yield ETF (HYLD).