U.S. High Yield Bond Strategy - What Makes Us Different

April 2018
Kevin Loome , Portfolio Manager

U.S. High Yield Bond Strategy - What Makes Us Different?

Key competitive differentiators for our team and our strategy over the years have been a couple of things:

  1. The experience level of the team members is high relative to most of the people we compete against. The focus of the strategy is very important, so our team is spending 100% of our time focusing on the high yield bond market.

  2. We run a very focused strategy in the sense that it is very concentrated. I think that’s been a very good differentiator for us over the years. If people ask how we’ve generated alpha, it’s definitely from concentrated credit selection.

  3. We don’t pigeonhole ourselves in one part of the credit spectrum, one geography, one type of asset. We don’t screen companies and exclude half of the universe based on some screening mechanism. Our philosophy is to embrace the entire opportunity set thereby maximizing the sources of alpha that we can use in this strategy.

 

I think because of that focus and that concentration and that experience level, we’ve been able to navigate some of the harder parts of the credit cycle, while at the same time adding value by bottom-up credit selection.

 

Key Risks

The following risks are materially relevant to the strategy highlighted in this material:

Credit risk - a bond or money market security could lose value if the issuer's financial health deteriorates. Default risk - the issuers of certain bonds could become unable to make payments on their bonds. Interest rate risk - when interest rates rise, bond values generally fall. This risk is generally greater the longer the maturity of a bond investment and the higher its credit quality. Liquidity risk - any security could become hard to value or to sell at a desired time and price.

 

Important Information

This material is being furnished for general informational purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, and prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction. Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources’ accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of 31 March 2018 and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request. It is not intended for distribution to retail investors in any jurisdiction.

 

201804-476107

IMPORTANT INFORMATION

This material is being furnished for general informational purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, and prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources' accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date noted on the material and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request.  

It is not intended for distribution to retail investors in any jurisdiction.