Peritus' Writings

Peritus in the News

Peritus’ Blog

See our daily market commentaries and insights.

Position Papers

The New Case for High Yield – January 2013

Throughout its 30+ year history, the high yield market has often been viewed as a confusing or an alternative asset class.  However, the reality is that this is a large, developed and liquid asset class.  We have provided this “owner’s manual” for those investing in the high yield market.  In it we detail the history and development of the space, discuss the legislation and ratings methodologies that have created opportunities in the marketplace, and compare historical risk adjusted returns with other asset classes.  Additionally, we describe our own investment philosophy and approach to the high yield market.  We believe that the benefits from investing in the high yield market are undeniable.

Other Writings and Publications

Certainty Rates, and the Year Ahead – January 2013

We have just completed our most recent writing, “Certainty, Rates, and the Year Ahead.”  Even after a strong showing for high yield bonds in 2012, we continue to believe that this asset class remains in the sweet spot for investors in 2013.¹

• High yield bonds have a short duration and limited interest rate sensitivity, given the shorter maturities and higher coupons.  We would expect to see higher rates in 2013, which will punish investors in high grade bonds that are more sensitive to rate changes.
• The primary risk for high yield investors is credit risk, which looks to be very tame and manageable over the coming years, as evidenced by the historically low default rates projected by J.P. Morgan and the conservative leverage metrics that we are seeing.
• While all the talk is about the leveraged loan market, we are not convinced.  The default outlook for this market is even higher than that for high yield bonds, which would indicate the concept of “lower risk” is an illusion.  Additionally, while higher rates would favor the lower duration/floating rate of leveraged loans, the higher interest cost would hurt the credit metrics of loan-heavy capital structures.  We encourage investors to use the loan market to expand the number of opportunities to invest in, not to produce what could be illusionary portfolio math.
• While generally low rates and a risk-on mentality appear to favor equities, poor global growth patterns will likely put a cap on returns and will hamper earnings growth and multiple expansion.

We hope you take the time to read our full writing and we look forward to the  year ahead.

¹  See the paper for source references.

• Peritus in the News
  May 20, 2013

  Peritus was mentioned in the article, "The Highest Yielding Bond ETFs," by Thomas Kenny of About.com Guide, May 15th, 2013.

• Upcoming Events
  May 16, 2013

  Ron Heller, the Chief Investment Officer and Senior Portfolio Manager of Peritus, will be attending the INSITE 2013 Pershing Conference on June 5-7th and the Morningstar Investment Conference on June 12-14th.  Be sure to visit Ron at the AdvisorShares booth, #513 at INSITE and #455 at Morningstar.

• Peritus in the News
  May 16, 2013

  Peritus was mentioned in the article, "High-Yield Bond ETFs Fall Amid Outflows," by Paul Weisbruch of Street One Financial, on May 15, 2013.