In the third quarter, bond markets recovered their losses from the prior three-month period, rallying based on the U.S. Federal Reserves announcement on September 18 that it would not taper its bond-buying program. Corporate issuance continued at a rapid pace. In addition, the city of Detroit filed for Chapter 9 bankruptcy on July 18, making it the largest municipal bankruptcy filing in U.S. history. For the quarter, the high-yield market as measured by the BofA Merrill Lynch High Yield Master II Constrained Index gained 2.25%, bringing the Index to a 3.79% return year-to-date.
The Multi-Manager High Yield Opportunity Fund finished the quarter in line with the benchmark, returning 2.29%. The Funds exposure to convertible bonds added value as the more equity sensitive nature of these investments rallied with the equity markets. The Fund also benefited from a significant allocation to holdings in the CCC quality range, as lower-rated securities rallied, particularly toward the end of the quarter.
Sub-adviser performance was within expectations, with Neuberger Berman generating the most significant returns during the period.
If you're looking for a total-return-oriented high yield fund that's designed to provide competitive performance in a broad range of market environments, you may want to consider the Multi-Manager High Yield Opportunity Fund. The highly diversified, multi-style Fund can invest in high yield corporate securities as well as foreign bonds, emerging markets, bank loans, convertibles, preferreds, mortgages, REITs, equities, munis and closed-end high yield funds. Despite the Fund's opportunistic investment strategy, it can be used as the primary high yield allocation in portfolios.
- Strive to maintain a highly diversified, opportunistic investment strategy that can invest in high yield corporate securities as well as foreign bonds, emerging markets, bank loans, convertibles, preferreds, mortgages, REITs, equities, municipals and closed-end high yield funds.
- Select complementary manager from a broad universe of investment managers.
- Blend managers into a single fund in an effort to provide an attractive combination of risk and return.