What I Bought Last highest yields , and believe the team behind the Man GLG High Yield Opportunities fund offers the right exposure as it can take both long and short positions . The fund is a dynamic high-yield offering that will perform very differently to any benchmark , while the team behind it has the full toolkit at its disposal : it can flex its level of credit risk , short individual names and is a specialist in restructuring non-performing debt . The toolbox available to manager Michael Scott and his expertise in the higher-risk end of the credit markets allows it to be positioned to generate a yield-to-worst – the lowest possible yield that can be obtained from a bond that doesn ’ t default – of more than 10 %. Moreover , Scott ’ s record of alpha generation hasn ’ t been interrupted by his move from Schroders to Man GLG , where he has built an impressive team .
Economic pessimism With the bleak economic outlook , it feels like a strange time to be adding to high yield , but we believe that the spreads available are already pricing in economic pessimism , which makes the position attractive . While we are keeping a close eye on default rates , in an environment where earnings remain mixed and equity valuations uncertain , high-yield debt appears to be an attractive use of our risk budget . We see the fund as a long-term holding rather than an assetallocation tool as we want a throughthe-cycle high-yield allocation rather than one that requires us to time the market . However , we recognise that the Man GLG High Yield Opportunities team ’ s positioning will not necessarily synchronise with our own macro view .
Dan James is head of asset management at Charles Stanley
Issue 95 - May 2023 / 71 /