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How a High-Yield Fund Is Becoming a ‘One-Stop Shop’ for Bond Investors

Accent - Barron

Average investors often don’t stick around in certain markets long enough to see their patience rewarded. That can be especially true in the sometimes volatile high-yield bond market, where income seekers are drawn to rich yields but can be tempted to flee when the market swings.

Mike Kirkpatrick, portfolio manager for the Virtus Seix High Yield fund (ticker: HYPSX), tries to smooth out the portfolio’s performance over time by staying flexible. He and portfolio co-manager James FitzPatrick do that by selecting higher-quality credits that can minimize losses during selloffs, while also looking for mispriced securities to improve performance. Kirkpatrick says too many high-yield managers tend to stick to their style no matter where in the cycle the economy is, which can cause investors to leave when that investing style is out of favor.

“To some degree, this puts the burden on the investor to know when to pivot from a defensive manager to a more aggressive manager, and vice versa. We want to be the one-stop shop to ride through the cycle,” Kirkpatrick says, as the managers aspire for the fund to be a core fixed-income holding.

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Photograph by Morgan Rachel Levy; used with permission.

IMPORTANT RISK CONSIDERATIONS
Credit & Interest: Debt instruments are subject to various risks, including credit and interest rate risk. The issuer of a debt security may fail to make interest and/or principal payments. Values of debt instruments may rise or fall in response to changes in interest rates, and this risk may be enhanced with longer-term maturities. High Yield Fixed Income Securities: There is a greater risk of issuer default, less liquidity, and increased price volatility related to high yield securities than investment grade securities. Foreign Investing: Investing in foreign securities subjects the portfolio to additional risks such as increased volatility, currency fluctuations, less liquidity, and political, regulatory, economic, and market risk. Market Volatility: Local, regional, or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, or other events could have a significant impact on the portfolio and its investments, including hampering the ability of the portfolio manager(s) to invest the portfolio’s assets as intended. Prospectus: For additional information on risks, please see the fund’s prospectus.

Please consider a Fund’s investment objectives, risks, charges, and expenses carefully before investing. For this and other information about any Virtus Fund, contact your financial professional, call 800-243-4361, or visit virtus.com for a prospectus or summary prospectus. Read it carefully before investing.