Aristotle Pacific Captial
Strategic Credit

Strategy Overview

Tactical and Opportunistic Allocations to Credit Classes

The dynamic nature of credit markets presents opportunities for investors to improve outcomes by tactically allocating capital among asset classes. Our approach seeks to gain an advantage based on our focus and perspective in credit and agility within credit asset classes. Our strategic credit strategy invests opportunistically across the broad range of bank-loan, high-yield and investment grade opportunities with emphasis on relative-value analysis.

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Aristotle Pacific Captial
Short Duration

Strategy Overview

Current Income, Low Interest-Rate Risk

Our short-duration strategy invests in limited-maturity securities across credit classes and capital structures. We seek to position portfolios to provide investors with current income and limited exposure to interest-rate risk.

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Aristotle Pacific Captial
Investment Grade

Strategy Overview

Agility, Access and Experience in Investment-Grade Bonds

When selecting a core or core-plus fixed-income strategy, we believe investors should consider the management team’s expertise, market access, and transactional agility. The strategy seeks to outperform the Barclays US Aggregate Index by investing primarily in investment-grade debt, with a focus on corporate credit. (The strategy may also invest in non-investment grade sectors along with sectors outside that of the Barclays US Aggregate Index.) Our core strategies benefit from seasoned and distinguished investment professionals sharing a unique perspective across credit markets.

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Aristotle Pacific Captial
High Yield

Strategy Overview

Bottom-Up, Credit-Intensive Analysis of High-Yield Bonds

An actively managed portfolio of high-yielding corporate bonds offers investors the potential to enhance overall diversification and boost current income. Through a selective, credit-intensive approach, our experienced high-yield team builds portfolios from the bottom up, one issuer at a time, with a keen eye for value.

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Aristotle Pacific Captial
CLOs

Strategy Overview

A Customized, Collateral-Focused CLO Investment Offering

A comprehensive approach to investing across liabilities and equity of CLOs managed by experienced credit managers. Offered in commingled fund vehicles.

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Aristotle Pacific Captial
Bank Loans

 

 

Strategy Overview

A Selective, Active Approach to Senior-Secured Loans

A selectively constructed portfolio of senior-secured loans offers investors the potential to improve the risk-reward characteristics of their fixed-income portfolios. Our approach is to be selective and active with a focus on larger, more liquid issues.

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Aristotle Capital Management
Global Equity

Strategy Overview

  • Fundamental, bottom‐up stock selection process applied to a universe of companies with market capitalizations typically in excess of $2 billion at initial investment
  • Focused strategy tends to be characterized by high active share and low turnover
  • Initial position size is approximately 2%
  • Portfolio is composed of global equities, utilizing both American Depositary Receipts (ADRs) and foreign ordinary shares
  • Objective is to achieve attractive long‐term returns versus the benchmark with a focus on mitigating risk over a complete market cycle

 

All portfolio holdings must meet the following three criteria:

  • High Quality: Companies in great and/or improving lines of business.
  • Attractive Valuation: Assess the value of the company utilizing private equity approach to public markets.
  • Compelling Catalyst: Actions/events currently underway that may propel a company forward over the next three to five years.

Strategy Inception Date: November 1, 2010

Assets: $1,429.0 million (as of 6/30/2024)

Benchmarks: MSCI ACWI Index (Net); MSCI World Index (Net)

Minimum Market Cap: Typically $2 billion at initial purchase

Cash: Typically less than 5%

Sector Weights: Within 50%-200% of MSCI World Index major sector weights

Vehicles Offered: Separate Account; Collective Trust; Mutual Fund

As of: 6/30/2024

Performance

Trailing (%) QTD YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs Since Inception1
Global Equity Composite (Gross) -0.76 5.35 13.19 3.71 10.11 9.29 10.05
Global Equity Composite (Net) -0.84 5.19 12.85 3.37 9.76 8.92 9.62
MSCI ACWI Index (Net) 2.87 11.30 19.38 5.43 10.74 8.43 9.14
MSCI World Index (Net) 2.63 11.75 20.19 6.85 11.76 9.15 10.07
Calendar Year (%) 2023 2022 2021 2020 2019 2018 2017
Global Equity Composite (Gross) 20.16 -17.27 20.20 18.24 29.18 -7.58 24.53
Global Equity Composite (Net) 19.80 -17.54 19.87 17.80 28.74 -7.93 24.05
MSCI ACWI Index (Net) 22.20 -18.36 18.54 16.25 26.60 -9.42 23.97
MSCI World Index (Net) 23.79 -18.14 21.82 15.90 27.67 -8.71 22.40
1The Aristotle Global Equity Composite has an inception date of November 1, 2010.
Past performance is not indicative of future results. Performance results for periods greater than one year have been annualized. Returns are preliminary pending final account reconciliation. Returns are presented gross and net of actual investment advisory fees and include the reinvestment of all income. Gross returns will be reduced by fees and other expenses that may be incurred in the management of the account. Net returns are presented net of actual investment advisory fees and after the deduction of all trading expenses. This material is not financial advice or an offer to buy or sell any product. Please see important disclosures at the end of this web page.

Characteristics

  Global Equity MSCI ACWI
Number of Holdings 47 2,760
Active Share (%) 91.0
Annualized Turnover (5 Yrs, %) 10.4

The Portfolio Characteristics shown are based on a representative account. Please see important disclosures at the bottom of this web page.

Portfolio Risk/Return Statistics

5 Years Global Equity MSCI ACWI Index (Net)
Upside Market Capture (%) 97 100
Downside Market Capture (%) 100 100
Annualized Alpha (%) -0.42
Tracking Error (%) 3.89
R-Squared 0.95 1.00
Beta 0.99 1.00
Standard Deviation (%) 17.68 17.43
Information Ratio -0.17
Sharpe Ratio 0.45 0.49

Largest Holdings (%)

Microsoft 5.1
Lennar 4.6
Cameco 3.6
Martin Marietta Materials 3.5
Microchip Technology 3.0
Munich Reinsurance 3.0
Qualcomm 2.9
Adobe 2.8
TotalEnergies 2.7
Amgen 2.6
Total 33.8

Region Weights (%)

Sector Weights (%)

Sources: CAPS CompositeHubTM, SS&C Advent, FactSet, MSCI, eVestment
MSCI ACWI (Net) was stated as the primary benchmark on June 1, 2024 andMSCI World (Net) became the secondary benchmark. The Largest Holdings shown are based on total account of the model portfolio. The Region Weights and Sector Weights shown are based on the model portfolio and exclude cash. The Portfolio Risk/Return Statistics figures are based on the Aristotle Global Equity Composite (“Composite”). The representative account was chosen since, in our view, it is the account within the Composite that most closely reflects the portfolio management style of the strategy. Not every client’s account will have these exact characteristics. The actual characteristics with respect to any particular client account will vary based on a number of factors, including but not limited to: (i) the size of the account; (ii) investment restrictions applicable to the account, if any; and (iii) market exigencies at the time of investment. You should not assume that any of the securities transactions, sectors or holdings discussed in this report are or will be profitable, or that recommendations Aristotle Capital Management, LLC (Aristotle Capital) makes in the future will be profitable or equal the performance of the securities listed in this report. There is no assurance that any securities, sectors or industries discussed herein will be included in or excluded from an account’s portfolio. Aristotle Capital reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. This is not a recommendation to buy or sell a particular security. Recommendations made in the last 12 months are available upon request. Past performance is not indicative of future results. All investments carry a certain degree of risk, including the possible loss of principal. Investments are also subject to political, market, currency and regulatory risks or economic developments. International investments involve special risks that may in particular cause a loss in principal, including currency fluctuation, lower liquidity, different accounting methods and economic and political systems, and higher transaction costs. These risks typically are greater in emerging markets. Securities of small- and medium-sized companies tend to have a shorter history of operations, be more volatile and less liquid. Value stocks can perform differently from the market as a whole and other types of stocks. The material is provided for informational and/or educational purposes only and is not intended to be and should not be construed as investment, legal or tax advice and/or a legal opinion. Investors should consult their financial and tax adviser before making investments. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Information and data presented has been developed internally and/or obtained from sources believed to be reliable. Aristotle Capital does not guarantee the accuracy, adequacy or completeness of such information. The MSCI ACWI Index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI ACWI captures large and mid cap representation across 23 Developed Markets (DM) and 24 Emerging Markets (EM) countries. With approximately 2,900 constituents, the index covers approximately 85% of the global investable equity opportunity set. The MSCI World Index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance in 23 developed markets countries. The MSCI World Index includes the following countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States. The volatility (beta) of the Composite may be greater or less than that of the benchmarks. It is not possible to invest directly in these indices. Dividend Yield is the ratio of a firm’s dividends each year relative to its share price. Active Share is a measure of the percentage of stock holdings in a manager’s portfolio that differ from the benchmark index. Turnover is calculated by taking either the total purchases or total sales of portfolio securities (whichever is less), over a particular period, and dividing it by the monthly average market value of the portfolio during that period. Weighted Average Market Capitalization is a dollar-value measurement of the size of companies in a portfolio or index. In such a weighting scheme, an average figure is derived from the market capitalizations of each company (their market prices multiplied by the number of shares outstanding) multiplied by their weights in the portfolio or index. Return on Equity is the amount of net income returned as a percentage of shareholders’ equity. Return on equity measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested. Price to Earnings is the ratio of a firm’s closing stock price and its trailing 12 months’ earnings per share. Price to Book is a ratio used to compare a stock’s market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter’s book value per share. Upside Market Capture is a measure of the performance in up markets relative to the market itself. Downside Market Capture is a measure of the performance in down markets relative to the market itself. Annualized Alpha is a measure of risk-adjusted excess return over the style index. Tracking Error is the annualized standard deviation of the differences between the portfolio and index returns. R-Squared is a measure of how closely related the variance of the manager returns and the variance of the benchmark returns are. Beta is used to measure market risk. It is defined as the average relationship, over time, of the portfolio’s rate of return to the style index. Standard Deviation is a measure of risk or variability of returns over time. Higher deviation represents higher volatility. Information Ratio is a measure of returns above the benchmark (usually an index) relative to the volatility of those returns. Sharpe Ratio is a measure of the excess return over the risk-free rate relative to standard deviation to determine the reward per unit of risk.

Aristotle Capital Management, LLC is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Aristotle Capital, including our investment strategies, fees and objectives, can be found in our Form ADV Part 2, which is available upon request.

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Aristotle Capital Management
International Equity

Strategy Overview

  • Fundamental, bottom-up stock selection process applied to a universe of companies with market capitalizations typically in excess of $2 billion at initial investment
  • Focused strategy tends to be characterized by high active share and low turnover
  • Initial position size is typically 2%‐3%
  • Portfolio is composed mainly of non‐U.S.‐based companies and may invest up to 20% in emerging markets, utilizing both American Depositary Receipts (ADRs) and foreign ordinary shares
  • Objective is to achieve attractive long-term returns versus the benchmarks while mitigating risk over a complete market cycle

 

All portfolio holdings must meet the following three criteria:

  • High Quality: Companies in great and/or improving lines of business.
  • Attractive Valuation: Assess the value of the company utilizing private equity approach to public markets.
  • Compelling Catalyst: Actions/events currently underway that may propel a company forward over the next three to five years.

Strategy Inception Date: January 1, 2008

Assets: $5,142.7 million (as of 6/30/2024)

Benchmarks: MSCI EAFE Index (Net); MSCI ACWI ex USA Index (Net)

Minimum Market Cap: Typically $2 billion at initial purchase

Cash: Typically less than 5%

Sector Weights: Within 50%-200% of MSCI EAFE Index major sector weights

Country Weights: Within 50%-200% of MSCI EAFE Index major country weights

Vehicles Offered: Separate Account; Mutual Fund; Collective Trust

As of: 6/30/2024

Performance

Trailing (%) QTD YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs Since Inception1
Int’l Equity Composite (Gross) -0.85 2.89 8.46 1.03 5.89 4.85 5.64
Int’l Equity Composite (Net) -0.96 2.66 7.97 0.56 5.39 4.35 5.14
MSCI EAFE Index (Net) -0.42 5.34 11.54 2.89 6.46 4.33 3.00
MSCI ACWI ex USA Index (Net) 0.96 5.69 11.62 0.46 5.54 3.84 2.62
Calendar Year (%) 2023 2022 2021 2020 2019 2018 2017
Int’l Equity Composite (Gross) 18.54 -20.48 17.01 10.55 25.09 -9.74 23.77
Int’l Equity Composite (Net) 18.00 -20.86 16.46 10.03 24.50 -10.19 23.20
MSCI EAFE Index (Net) 18.24 -14.45 11.26 7.82 22.01 -13.79 25.03
MSCI ACWI ex USA Index (Net) 15.62 -16.00 7.82 10.65 21.51 -14.20 27.19
¹The Aristotle International Equity Composite has an inception date of January 1, 2008.
Past performance is not indicative of future results. Performance results for periods greater than one year have been annualized. Returns are preliminary pending final account reconciliation. Returns are presented gross and net of actual investment advisory fees and include the reinvestment of all income. Gross returns will be reduced by fees and other expenses that may be incurred in the management of the account. Net returns are presented net of actual investment advisory fees and after the deduction of all trading expenses. This material is not financial advice or an offer to buy or sell any product. Please see important disclosures at the end of this web page.

Characteristics

  Int’l Equity MSCI EAFE
Number of Holdings 38 742
Active Share (%) 90.1
Annualized Turnover (5 Yrs, %) 8.8

The Portfolio Characteristics shown are based on a representative account. Please see important disclosures at the bottom of this web page.

Portfolio Risk/Return Statistics

Since Inception (1/1/08) Int’l Equity MSCI EAFE Index (Net)
Upside Market Capture (%) 101 100
Downside Market Capture (%) 103 100
Annualized Alpha (%) -0.64
Tracking Error (%) 3.26
R-Squared 0.97 1.00
Beta 1.03 1.00
Standard Deviation (%) 18.55 17.71
Information Ratio -0.18
Sharpe Ratio 0.20 0.24

Largest Holdings (%)

Munich Reinsurance (Germany) 4.6
Accenture (Ireland) 4.2
Brookfield Corporation (Canada) 4.0
Cameco (Canada) 3.7
Ashtead Group (United Kingdom) 3.4
Nemetschek (Germany) 3.3
Safran (France) 3.3
Sony Group (Japan) 3.2
Pan Pacific International Holdings (Japan) 3.2
Roche Holding (Switzerland) 3.0
Total 35.9

Region Weights (%)

Sector Weights (%)

Sources: CAPS CompositeHubTM, SS&C Advent, FactSet, MSCI, eVestment
The Portfolio Characteristics shown are based on a representative account. The Largest Holdings shown are based on total account of the model portfolio. The Region Weights and Sector Weights shown are based on the equity composition of the model portfolio and exclude cash. The representative account was chosen since, in our view, it is the account within the Composite that most closely reflects the portfolio management style of the strategy. Not every client’s account will have these exact characteristics. The actual characteristics with respect to any particular client account will vary based on a number of factors, including but not limited to: (i) the size of the account; (ii) investment restrictions applicable to the account, if any; and (iii) market exigencies at the time of investment. You should not assume that any of the securities transactions, sectors or holdings discussed in this report are or will be profitable, or that recommendations Aristotle Capital Management, LLC (Aristotle Capital) makes in the future will be profitable or equal the performance of the securities listed in this report. There is no assurance that any securities, sectors or industries discussed herein will be included in or excluded from an account’s portfolio. Aristotle Capital reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. This is not a recommendation to buy or sell a particular security. Recommendations made in the last 12 months are available upon request. Past performance is not indicative of future results. The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the United States and Canada. The MSCI EAFE Index consists of the following 21 developed markets countries: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the United Kingdom. The MSCI ACWI ex USA Index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets, excluding the United States. The MSCI ACWI ex USA captures large and mid cap representation across 22 of the 23 Developed Markets (DM) countries (excluding the United States) and 25 emerging markets countries. With over 2,300 constituents, the Index covers approximately 85% of the global equity opportunity set outside the United States. DM countries include: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the UK and the US. EM countries include: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Kuwait, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates. The volatility (beta) of the Composite may be greater or less than that of the benchmark. It is not possible to invest directly in these indices. Excess returns are investment returns in excess of the benchmark or index returns. Dividend Yield is the ratio of a firm’s dividends each year relative to its share price. Active Share is a measure of the percentage of stock holdings in a manager’s portfolio that differ from the benchmark index. Turnover is calculated by taking either the total purchases or total sales of portfolio securities (whichever is less), over a particular period, and dividing it by the monthly average market value of the portfolio during that period. Weighted Average Market Capitalization is a dollar-value measurement of the size of companies in a portfolio or index. In such a weighting scheme, an average figure is derived from the market capitalizations of each company (their market prices multiplied by the number of shares outstanding) multiplied by their weights in the portfolio or index. Return on Equity is the amount of net income returned as a percentage of shareholders’ equity. Return on equity measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested. Upside Market Capture is a measure of the performance in up markets relative to the market itself. Downside Market Capture is a measure of the performance in down markets relative to the market itself. Annualized Alpha is a measure of risk-adjusted excess return over the style index. Tracking Error is the annualized standard deviation of the differences between the portfolio and index returns. R-Squared is a measure of how closely related the variance of the manager returns and the variance of the benchmark returns are. Beta is used to measure market risk. It is defined as the average relationship, over time, of the portfolio’s rate of return to the style index. Standard Deviation is a measure of risk or variability of returns over time. Higher deviation represents higher volatility. Information Ratio is a measure of returns above the benchmark (usually an index) relative to the volatility of those returns. Sharpe Ratio is a measure of the excess return over the risk-free rate relative to standard deviation to determine the reward per unit of risk. This material is not financial advice or an offer to buy or sell any product.

All investments carry a certain degree of risk, including the possible loss of principal. Investments are also subject to political, market, currency and regulatory risks or economic developments. International investments involve special risks that may in particular cause a loss in principal, including currency fluctuation, lower liquidity, different accounting methods and economic and political systems, and higher transaction costs. These risks typically are greater in emerging markets. Securities of small- and medium-sized companies tend to have a shorter history of operations, be more volatile and less liquid. Value stocks can perform differently from the market as a whole and other types of stocks. The material is provided for informational and/or educational purposes only and is not intended to be and should not be construed as investment, legal or tax advice and/or a legal opinion. Investors should consult their financial and tax adviser before making investments. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Information and data presented has been developed internally and/or obtained from sources believed to be reliable. Aristotle Capital does not guarantee the accuracy, adequacy or completeness of such information.

Aristotle Capital Management, LLC is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Aristotle Capital, including our investment strategies, fees and objectives, can be found in our Form ADV Part 2, which is available upon request.

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Aristotle Capital Management
Value Equity (U.S.)

Strategy Overview

  • Fundamental, bottom‐up stock selection process applied to a universe of companies with market capitalizations in excess of $2 billion at initial investment
  • Focused strategy tends to be characterized by high active share and low turnover
  • Initial position size is typically 2.0%‐2.5%, with a maximum position size 6% of portfolio market value
  • Portfolio is composed mainly of U.S.‐based companies and may invest up to 20% in companies based outside the U.S. (ADRs)
  • Objective is to achieve attractive long-term returns versus the benchmarks while mitigating risk over a complete market cycle

 

All portfolio holdings must meet the following three criteria:

  • High Quality: Companies in great and/or improving lines of business.
  • Attractive Valuation: Assess the value of the company utilizing private equity approach to public markets.
  • Compelling Catalyst: Actions/events currently underway that may propel a company forward over the next three to five years.

Strategy Inception Date : November 1, 2010

Assets: $44,647.7 million (as of 6/30/2024)

Benchmarks: Russell 1000 Value Index; S&P 500 Index

Minimum Market Cap: Typically $2 billion at initial purchase

Cash: Typically less than 5%

Sector Weights: Within 50%-200% of S&P 500 Index major sector weights

Vehicles Offered: Separate Account; Mutual Fund; Collective Trust

As of: 6/30/2024

Performance

Trailing (%) QTD YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs Since Inception1
Value Equity Composite (Gross) -1.55 5.96 17.62 5.49 12.11 11.46 12.94
Value Equity Composite (Net) -1.61 5.83 17.33 5.22 11.82 11.12 12.56
Russell 1000 Value Index -2.17 6.62 13.06 5.52 9.00 8.22 10.68
S&P 500 Index 4.28 15.29 24.56 10.00 15.03 12.85 14.01
Calendar Year (%) 2023 2022 2021 2020 2019 2018 2017
Value Equity Composite (Gross) 20.58 -14.58 25.87 15.29 33.50 -8.25 22.74
Value Equity Composite (Net) 20.29 -14.79 25.54 15.00 33.07 -8.58 22.34
Russell 1000 Value Index 11.46 -7.54 25.16 2.80 26.54 -8.27 13.66
S&P 500 Index 26.29 -18.11 28.71 18.40 31.49 -4.38 21.83
1The Aristotle Value Equity Composite has an inception date of November 1, 2010.
Past Performance is not indicative of future results. Performance results for periods greater than one year have been annualized. Returns are presented gross and net of investment advisory fees and include the reinvestment of all income. Gross returns will be reduced by fees and other expenses that may be incurred in the management of the account. Net returns are presented net of actual investment advisory fees and after the deduction of all trading expenses. This material is not financial advice or an offer to buy or sell any product. Please see important disclosures at the bottom of this web page.

Characteristics

  Value Equity R1000V
Number of Holdings 42 846
Active Share (%) 91.2
Annualized Turnover (5 Yrs, %) 10.7

The Portfolio Characteristics shown are based on a representative account. Please see important disclosures at the bottom of this web page.

Market Cap Breakdown (%)

Portfolio Risk/Return Statistics

5 Years Value Equity Russell 1000 Value Index
Upside Market Capture (%) 103 100
Downside Market Capture (%) 92 100
Annualized Alpha (%) 3.19
Tracking Error (%) 4.55
R-Squared 0.94 1.00
Beta 0.97 1.00
Standard Deviation (%) 18.41 18.44
Information Ratio 0.68
Sharpe Ratio 0.54 0.37

Largest Holdings (%)

Microsoft 4.0
Parker Hannifin 3.8
Lennar 3.4
Qualcomm 3.4
Ameriprise Financial 3.2
Adobe 3.0
Microchip Technology 2.9
Corteva 2.8
Martin Marietta Materials 2.8
ANSYS 2.6
Total 31.9

Sector Weights (%)

Sources: CAPS CompositeHubTM,SS&C Advent, FactSet, Russell Investments, Standard & Poor’s, eVestment
The Largest Holdings shown are based on total account of the model portfolio. The Market Cap Breakdown shown is based on a representative account. The Sector Weights shown are based on equity composition of the model portfolio and exclude cash. The Sector Weights shown are based on the equity composition of the model portfolio and exclude cash. The representative account was chosen since, in our view, it is the account within the Composite that most closely reflects the portfolio management style of the strategy. Not every client’s account will have these exact characteristics. The actual characteristics with respect to any particular client account will vary based on a number of factors, including but not limited to: (i) the size of the account; (ii) investment restrictions applicable to the account, if any; and (iii) market exigencies at the time of investment. You should not assume that any of the securities transactions, sectors or holdings discussed in this report are or will be profitable, or that recommendations Aristotle Capital Management, LLC (Aristotle Capital) makes in the future will be profitable or equal the performance of the securities listed in this report. There is no assurance that any securities, sectors or industries discussed herein will be included in or excluded from an account’s portfolio. Aristotle Capital reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. This is not a recommendation to buy or sell a particular security. Recommendations made in the last 12 months are available upon request. Past performance is not indicative of future results. The Russell 1000 Value Index measures the performance of the large cap value segment of the U.S. equity universe. It includes those Russell 1000® Index companies with lower price-to-book ratios and lower expected growth values. The S&P 500® Index is the Standard & Poor’s Composite Index of 500 stocks and is a widely recognized, unmanaged index of common stock prices. The volatility (beta) of the Composite may be greater or less than that of the benchmark. It is not possible to invest directly in these indices. Composite and index returns reflect the reinvestment of income. Composite returns are presented gross and net of actual investment advisory fees. Returns are presented net of trading costs. Net returns reflect the additional deduction of management fees and are based on the actual account-level net returns. Dividends are recorded gross of withholding taxes. Dividend Yield is the ratio of a firm’s dividends each year relative to its share price. Active Share is a measure of the percentage of stock holdings in a manager’s portfolio that differ from the benchmark index. Turnover is calculated by taking either the total purchases or total sales of portfolio securities (whichever is less), over a particular period, and dividing it by the monthly average market value of the portfolio during that period. Weighted Average Market Capitalization is a dollar-value measurement of the size of companies in a portfolio or index. In such a weighting scheme, an average figure is derived from the market capitalizations of each company (their market prices multiplied by the number of shares outstanding) multiplied by their weights in the portfolio or index. Return on Equity is the amount of net income returned as a percentage of shareholders’ equity. Return on equity measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested. Upside Market Capture is a measure of the performance in up markets relative to the market itself. Downside Market Capture is a measure of the performance in down markets relative to the market itself. Annualized Alpha is a measure of risk-adjusted excess return over the style index. Tracking Error is the annualized standard deviation of the differences between the portfolio and index returns. R-Squared is a measure of how closely related the variance of the manager returns and the variance of the benchmark returns are. Beta is used to measure market risk. It is defined as the average relationship, over time, of the portfolio’s rate of return to the style index. Standard Deviation is a measure of risk or variability of returns over time. Higher deviation represents higher volatility. Information Ratio is a measure of returns above the benchmark (usually an index) relative to the volatility of those returns. Sharpe Ratio is a measure of the excess return over the risk-free rate relative to standard deviation to determine the reward per unit of risk.

All investments carry a certain degree of risk, including the possible loss of principal. Investments are also subject to political, market, currency and regulatory risks or economic developments. International investments involve special risks that may in particular cause a loss in principal, including currency fluctuation, lower liquidity, different accounting methods and economic and political systems, and higher transaction costs. These risks typically are greater in emerging markets. Securities of small- and medium-sized companies tend to have a shorter history of operations, be more volatile and less liquid. Value stocks can perform differently from the market as a whole and other types of stocks. The material is provided for informational and/or educational purposes only and is not intended to be and should not be construed as investment, legal or tax advice and/or a legal opinion. Investors should consult their financial and tax adviser before making investments. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Information and data presented has been developed internally and/or obtained from sources believed to be reliable. Aristotle Capital does not guarantee the accuracy, adequacy or completeness of such information.

Aristotle Capital Management, LLC is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Aristotle Capital, including our investment strategies, fees and objectives, can be found in our Form ADV Part 2, which is available upon request.

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Aristotle Credit Partners
High Yield Bond

Strategy Overview

The High Yield Bond strategy seeks strong risk-adjusted returns relative to the benchmark through a combination of high current income and capital appreciation.

  • The combination of top-down and bottom-up analysis leads to the most comprehensive perspective on the corporate credit market.
  • The integration of ESG factors into our analysis enhances our credit selection process.
  • Disciplined risk management is a critical component of investing in corporate credits and should be carried out at both the security and portfolio level.

 

Investment process includes the following tenets:

  • Focus on Quality: We seek credits with strong fundamentals, ample cash flow, solid capital structures and low default risk.
  • In-Depth Research: Our process blends economic and market analysis with industry and credit research.
  • ESG Considerations: ESG factors are incorporated into our bottom-up, research process, with an emphasis on corporate governance.

Strategy Inception Date : April 1, 2014

Benchmark: ICE BofA BB-B U.S. Cash Pay High Yield Constrained Index

Minimum Security Rating: B/CCC

Cash: Maximum 5%

Issuer Max: BB: 4%; B: 3%; B/CCC: 2%

Minimum Issue Size: $150M Original Issuance

Maximum Allocation to Split B/CCC: 5%

Maximum Issue Holding: 10% of Original Issuance

Duration: +/- 25% of Index

Maximum Industry Allocation: 30.0%

Investment Grade Securities: Up to 25%

Portfolio Minimum Average Quality: B2

Maximum Allocation to Emerging Markets: 25%

As of: 6/30/2024

Performance

Trailing (%) QTD YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs Since Inception1
High Yield Bond Composite (Gross) 1.54 3.22 9.85 2.50 4.07 4.04 4.16
High Yield Bond Composite (Net) 1.48 3.09 9.57 2.26 3.84 3.83 3.96
ICE BofA BB-B U.S. Cash Pay HY Const. Index 1.21 2.52 10.07 1.60 3.64 4.22 4.37
Calendar Year (%) 2023 2022 2021 2020 2019 2018 2017
High Yield Bond Composite (Gross) 10.72 -7.26 4.30 6.01 13.61 -0.94 6.42
High Yield Bond Composite (Net) 10.44 -7.48 4.09 5.81 13.41 -1.12 6.24
ICE BofA BB-B U.S. Cash Pay HY Const. Index 12.55 -10.59 4.58 6.32 15.09 -2.04 6.98
1The Aristotle High Yield Bond Strategy has an inception date of April 1, 2014.
Past performance is not indicative of future results. Performance results for periods greater than one year have been annualized. Returns are preliminary pending final account reconciliation. Composite and benchmark returns reflect the reinvestment of income. Returns are presented gross and net of investment advisory fees and include the reinvestment of all income. Gross returns will be reduced by fees and other expenses that may be incurred in the management of the account. Net returns are presented net of actual investment advisory fees and after the deduction of all trading expenses. The Portfolio Data shown is based on a representative account. This material is not financial advice or an offer to buy or sell any product. Please see important disclosures at the end of the document.

Portfolio Data

  High Yield Benchmark2
Number of Issues 111 1,589
Average Credit Rating BB- BB-
Coupon (Avg., %) 5.90 6.20
Effective Duration (Yrs) 2.70 3.30
Effective Yield (%) 6.70 6.90
Maturity (Avg., Yrs) 4.40 5.00
Price (Avg., $) 97.40 96.40
Turnover (1 Yr, %) 39.0

Allocation by Credit Rating (%)

  High Yield Benchmark2
AAA 0.0 0.0
AA 0.0 0.0
A 0.0 0.0
BBB 6.0 0.5
BB 51.2 57.3
B 39.1 41.5
CCC or Lower 0.0 0.7
Not Rated 0.0 0.0
Cash 3.7 0.0
Total 100.0 100.0

Top 10 Holdings (%)

Security Coupon Maturity Weight
CCO Holdings LLC 4.500% 05/01/32 2.3
Air Lease Corp 4.125% 12/15/26 2.2
Energy Transfer LP 7.125% 05/15/30 2.1
Venture Global LNG Inc 9.500% 02/01/29 1.7
Air Canada 2020-1 Class C Pass Through Trust 10.500% 07/15/26 1.5
United Airlines 2019-2 Class B Pass Through Trust 3.500% 05/01/28 1.5
Endeavor Energy Resources LP 5.750% 01/30/28 1.4
Icahn Enterprises LP 5.250% 05/15/27 1.4
United Airlines Holdings Inc 4.875% 01/15/25 1.3
MGM Resorts International 6.500% 04/15/32 1.3
Total 16.7

Contribution to Duration (%)

Top 5 Overweights by Industry (%)

Industry High Yield Benchmark2
Energy 12.5 6.6
Transportation 6.4 2.6
Retailers & Restaurants 10.1 6.9
Brokerage & Asset Management 2.4 0.9
Gaming 3.9 2.7

Top 5 Underweights by Industry (%)

Industry High Yield Benchmark2
Technology 3.7 7.5
Telecommunications 0.0 3.6
Chemicals 0.0 2.7
DiversifIed Manufacturing & Construction Machinery 1.1 3.3
Insurance 0.0 1.9

2Benchmark represents the ICE BofA BB-B U.S. Cash Pay High Yield Constrained Index.
All investments carry a certain degree of risk, including the possible loss of principal. Investments are also subject to political, market, currency and regulatory risks or economic developments. There are risks specifically associated with fixed income investments such as interest rate risk and credit risk. Bond values fluctuate in price in response to market conditions. Typically, when interest rates rise, there is a corresponding decline in bond values. This risk may be more pronounced for bonds with longer-term maturities. Credit risk refers to the possibility that the bond issuer will not be able to make principal and interest payments. High yield securities are generally rated lower than investment grade securities and may be subject to greater market fluctuations, increased price volatility, risk of issuer default, less liquidity, or loss of income and principal compared to investment grade securities. The material is provided for informational and/or educational purposes only and is not intended to be and should not be construed as investment, legal or tax advice and/or a legal opinion. Investors should consult their financial and tax adviser before making investments. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Information and data presented has been developed internally and/or obtained from sources believed to be reliable. Aristotle Credit does not guarantee the accuracy, adequacy or completeness of such information. The Aristotle High Yield Bond Composite (the Composite) includes all discretionary accounts managed in this strategy. The objective of the Aristotle High Yield Bond strategy is to optimize long-term returns with a focus on mitigating market risk. The strategy is benchmarked to the ICE BofA BB-B U.S. Cash Pay High Yield Constrained Index. The accounts in the Composite consist of all separately managed fee-paying discretionary portfolios invested mainly in high yield bonds. The Composite will include only accounts that do not utilize leverage and do not have significant tax treatment or cash flow needs. The accounts will likely contain a limited number of positions (roughly 100 to 150 securities), with investments focused on the most liquid securities. A list of composite descriptions is available upon request. Past performance is not indicative of future results. The Portfolio Data, Allocation by Credit Rating, Top 5 Overweights and Underweights by Industry, Top 10 Holdings and Contribution to Duration figures shown are based on a representative account from the Composite. The representative account was chosen since, in our view, it is the account within the Composite that most closely reflects the portfolio management style of the strategy. Not every client’s account will have these exact characteristics. The actual characteristics with respect to any particular client account will vary based on a number of factors, including but not limited to: (i) the size of the account; (ii) investment restrictions applicable to the account, if any; and (iii) market exigencies at the time of investment. Aristotle Credit Partners, LLC (Aristotle Credit) reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. This is not a recommendation to buy or sell a particular security. Recommendations made in the last 12 months are available upon request. The ICE Bank of America (ICE BofA) BB-B U.S. Cash Pay High Yield Constrained Index measures the performance of the U.S. dollardenominated BB-rated and B-rated corporate debt issued in the U.S. domestic market, a fixed coupon schedule and a minimum amount outstanding of $100 million, issued publicly. Allocations to an individual issuer in the Index will not exceed 2%. The volatility (beta) of the Composite may be greater or less than that of the benchmark. It is not possible to invest directly in this index.

Yield to Worst is the lowest potential yield expressed as a percent that can be received on a bond without the issuer actually defaulting. Effective Duration is an approximate measure of the strategy’s sensitivity to interest rate changes taking into consideration any maturity shortening features. Maturity (Avg.) is a finite period of time at the end of which the financial instrument will cease to exist and the principal is repaid with interest. Coupon (Avg.) is the weighted average of the coupon of each bond in the strategy. Price (Avg.) is the weighted average of each bond price in the portfolio. Turnover is calculated by taking either the total purchases or total sales of portfolio securities (whichever is less), over a particular period, and dividing it by the monthly average market value of the portfolio during that period. Credit Rating is sourced from Standard & Poor’s (S&P), Moody’s and Fitch. Ratings values are based on the middle of the three ratings if all three credit rating agencies rate the security; based on the higher rating if rated by two of three credit rating agencies; or based on the sole agency’s rating if rated by only one of the three credit rating agencies. The ratings represent their (S&P, Moody’s, Fitch) opinions as to the quality of the securities they rate. The ratings from AAA (S&P, Fitch) or Aaa (Moody’s) (extremely strong capacity to meet its financial commitment) to D (S&P, Fitch) or C (Moody’s) (in default). Ratings are relative and subjective and are not absolute standards of quality. The ratings provided relate to the underlying securities within the portfolio and not the portfolio itself. Unrated securities do not necessarily indicate low credit quality.

Aristotle Credit Partners, LLC is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Aristotle Credit, including our investment strategies and objectives, can be found in our Form ADV Part 2, which is available upon request.

Materials

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