OYSTER Global High Yield is managed by Seix Investment Advisors, a high yield manager based in the US with an excellent track-record. The fund, which is still reserved for an institutional clientele, will be registered shortly in several countries in Europe and Asia, and become available to the public like the other OYSTER sub-funds. SYZ & CO believes the current environment is particularly favourable to high yield investing, which offers competitive risk-adjusted returns compared to equities.
High yield bonds have historically generated highly competitive returns compared to equities on a risk-adjusted basis, without being strongly correlated to any other asset class within a portfolio, making them an important tool for diversification. Moreover, the current market environment is favourable to high yield investing. The recent “flight to quality” has led to market sell-offs, which offer investors a good opportunity to invest in this attractive asset class. Indeed, many companies have taken strong measures to adapt to the environment and display solid balance sheets. As a result, current double-digit yields are inconsistent with the default rates forecast for the next two years. The implied default rate is nearly four times higher than the forecasts for company defaults (as measured by JP Morgan, one of the industry’s most followed benchmarks) and one-third higher than in a recessionary scenario. Finally, after downturns, high yield has typically delivered strong positive returns.
