Investment Approach

  • Integrates fundamental research and holistic capital structure considerations with a focus on global diversification targeting high yield companies from North American and European regions plus issuers located in emerging markets countries.
  • Represents the natural evolution of T. Rowe Price’s core high yield credit competency and recognizes the global growth of the high yield market that we expect to continue.
  • Invests primarily in global issuers rated below investment-grade and focuses on:
    • Proprietary fundamental analysis that drives independent credit and conviction ratings.
    • Global diversification of high yield corporate issuers.
    • Credits with long-term potential for balance sheet and external rating improvements.
    • Strict risk management practices.
  • Utilizes active management in the high yield market where credit selection is critical.

Portfolio Construction

  • High-conviction, concentrated approach targeting approximately 175 issuers across the globe with the flexibility to take meaningful over- and underweights to countries, regions, industries, ratings and individual credits.
  • Incorporates a truly global corporate composition using a top-down overlay based on relative and absolute valuation characteristics across regions, countries, credit qualities and industries to complement core bottom-up position selections targeting the following regional allocations:
    • U.S. high yield: range of 30%-70%
    • European high yield: range of 10% to 50%
    • Emerging markets: range of 0% to 40%
  • Single country exposure maximum of 15% excluding the U.S.
  • Sovereign debt up to 10%
  • Investment-grade corporates up to 15%
  • Bank loans up to 20%
  • Neutralize currency risk by hedging back into the base currency