Not All High Yield is Junk

Thanks to the outsized influence of Moody’s and S&P, many investors have a simplistic view of the bond market: investment grade is “safe” and high yield is “risky.” In this presentation, Carl Kaufman and John Sheehan, CFA, Portfolio Managers for the Osterweis Strategic Income Fund, will explain why they believe this view is fundamentally flawed. The distinction between the two segments is determined by an issuer’s agency rating, so they will begin by reviewing the principles behind ratings. They will then explain the limitations of using a single approach to define such a diverse and dynamic market, and they will explore how market inefficiencies allow savvy investors to construct high yield portfolios with risk profiles similar to investment grade portfolios. Carl and John will also discuss the structure of both market segments and examine the appropriate uses of each asset class in client portfolios. In their view, the allocation decisions are less clear than conventional wisdom suggests, as they have different strengths and risks.