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Multi Credit Investing: A Through-The-Cycle Approach to High Yield

December 2017 - 7 min read

Read about how a multi credit approach to high yield can benefit investors in this Q&A with Barings’ heads of U.S. and European high yield investments.

Martin Horne, Head of Global High Yield, and David Mihalick, Head of U.S. High Yield, discuss how a multi credit approach to the asset class can benefit investors.

How does Barings define high yield multi credit investing?

DAVID: At a high level, multi credit investing aims to take advantage of opportunities across the global high yield markets as they appear throughout the credit cycle. At Barings, we consider a high yield multi credit strategy as one that mostly comprises allocations to the “core four” sub asset classes—U.S. high yield bonds, U.S. loans, European high yield bonds and European loans—with the ability to make opportunistic allocations to collateralized loan obligations (CLOs), and stressed and distressed credits (special situations).

MARTIN: The market David identified is over $3 trillion in size, with approximately 3,000 issues, giving investors access to a much larger opportunity set than any one of these markets alone.1

This wider universe allows portfolio managers to select investments based on their best ideas, while still maintaining a highly diversified pool of corporate credit.

How can a multi credit strategy benefit investors, both in the current environment and longer-term / through a full credit cycle?

MARTIN: In this continued slow-growth, low-rate environment, the search for yield is ongoing, and many investors have become more comfortable with taking on additional credit risk in order to access potentially more attractive risk-adjusted returns. More and more, investors are looking to take their high yield allocation a step further by employing a strategy that allows their position to be increased or decreased within a set band based on risk tolerance. This is particularly true as they look to hold high yield longer-term or through a full credit cycle. In our view, it makes sense to give that high yield allocation as much flexibility as possible in order to quickly and efficiently capitalize on opportunities as they arise across bonds and loans in the U.S. and Europe.


  1. Source: Credit Suisse. As of September 30, 2017.

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