Option Finance has published a special issue on the high yield market in March 2023. Penalised by the rise in interest rates in 2022, funds invested in high yield saw their performance recover significantly at the beginning of the year. But the tightening of monetary policy and the bankruptcy of several US banks are now leading to a widening of spreads. While managers concede that volatility could affect the asset class in the coming months, they remain confident about the fundamentals.
Extract: « Where to invest on the high yield market ? »
"While the rise in interest rates is weighing on bond market valuations, it also offers many opportunities in terms of yield. This is especially true in the high yield segment. However, the prospect of contracting growth is also leading to an increase in the default rate. This report analyses the way managers - including Delphine Laloum at Ellipsis AM - approach the market and the measures implemented to control risks."
High Yield : This category corresponds to speculative securities with a rating below BBB- /Baa3 (official agency classification or Ellipsis AM's own).
In this dossier, you will find a focus on Ellipsis High Yield Fund as well as the convictions of our manager Delphine Laloum.
What is its current positioning? [....]We currently have over 63% exposure to the BB segment, which is the core of our portfolio. This segment offers an attractive risk/return ratio over the medium term. [....]
What makes it different? The fund has a good capacity to absorb market drawdowns. Ellipsis AM has been offering convex hedging solutions for almost 15 years. [....]
What performance can we expect this year? [....] High yield offers a positive real return expectation in an inflationary context, given the lower duration and the risk of default which seems limited in the medium term. [....]