The global high yield market has proved a divisive topic over the past five years with the knock-on effects of oil price crash causing many asset allocators to reassess their investments in this area.
However, with huge swathes of government debt in low or negative yielding territory, so-called ‘junk’ bonds have retained some allure among those on the hunt for yield.
On a short-term basis, over the three months to the end of September 2016, the average of the 384 active managers in the Bonds – Global High Yield sector returned 4.29% in US dollar terms.
But, if we expand the analysis period further, how have stalwarts of the sector fared? Stretching this back to September 2011, there were only 239 dedicated managers in the sector tracked by Citywire.
Of those, the average manager returned 34.2% in US dollar terms, which was below the most commonly held index, the BofA Merrill Lynch Global High Yield TR, which rose 48.4% over the same period.
As with every sector, however, there are standout performers who go above and beyond these returns. Citywire Selector has uncovered the high yield heavyweights who can attest to being the only managers to go above 100% over the past five years.
Julien Daire, CPR AM
Five year total return (September 2011-September 2016): 102.39%
The first of the outperforming duo is Citywire AA-rated Julien Daire, who works for French group CPR Asset Management. Daire, who is head of credit management, oversees five funds at the Paris-based asset manager and has run the CPR Credixx Global High Yield fund since September 2010.
He was joined on this fund by Benoit Houzelle in September 2013 and currently oversee €319.6 million in assets. The pair focus primarily on B-rated debt, which accounts for 59% of exposure, ahead of BB-rated bonds, which make up 46% of investments.
At a sector level, Daire and Houzelle have consumer discretionary as the largest investment, which makes up 34% of holdings. While the tracking error of the fund has reduced over time, on a five-year basis it sits at around 5.25%, while now it is closer to 1.3%.
Christian von Ballmoos, PvB Pernet von Ballmoos
Five year total return (September 2011-September 2016): 118.88%
Outstripping Daire and posting the strongest five-year number is Christian von Ballmoos, the founder of PvB Pernet von Ballmoos. The Citywire A-rated manager currently sits in the bottom quartile on a one-year total return basis but his five year numbers far exceed those of both the average peer and the index.
In his Swiss-domiciled fund, von Ballmoos has a strong focus on the US market, which accounts for two-thirds of investments, while the service sector accounts for 10.8% of holdings at a sector level. This is ahead of healthcare (10.8%) and chemicals (7.2%).
It follows an absolute return investment mandate and, as the name suggests, focuses on bonds which are asset-backed, which it views as an alternative to traditional high yield investments. Alegra Capital, which specialises as an ABS investor, also works as an adviser to the fund.